In response to the Bank of Canada’s decision to cut its overnight lending rate, the Summerland Credit Union has reduced its own prime lending rate.
On Jan. 21, in a surprise announcement, the Bank of Canada overnight lending rate was reduced from one per cent to 0.75 per cent.
By Saturday, Canada’s banks had not yet announced reductions to their interest rates.
The Summerland Credit Union’s announcement came on Friday afternoon. The prime lending rate was reduced from three per cent to 2.75 per cent.
Kelly Marshall, chief executive officer for the Summerland Credit Union, said the decision will result in lower interest rates for variable rate mortgages, lines of credit and other loans that float with prime rates.
“The interest rate decline is a positive for consumers,” Marshall said.
Mark pike, certified financial planner at the Credit Union said the rate reduction will help those with loans and mortgages.
“For borrowing, this is a good environment,” he said.
While any increase in low interest rates will affect borrowers, Pike said rates are unlikely to rise quickly in the future. He anticipates the rate will remain low.
Since 1990, the Bank of Canada’s interest rate has averaged six per cent. In that time, it has reached as high as 16 per cent in February, 1991 and as low as 0.25 per cent in April, 2009.