October 10, 2008

TD Lowers Prime to 4.35% as Government Buys Mortgages

It's another exciting day in mortgage finance:

• The Canadian government has taken the unusual move to buy $25 billion of insured mortgages. The plan will add liquidity to the system and "make loans and mortgages more available and more affordable for ordinary Canadians," said Finance Minister Jim Flaherty. This injection equates to about 3% of Canada's $800+ billion mortgage market. Coverage: Globe, Bloomberg
• "...we anticipate that our cost of funds will decrease with the implementation of this program." - TD CEO Ed Hockey
• TD has lowered their prime rate 0.15% to 4.35% as a result. Other banks should follow, but you never know in this environment. (CNW)
• “There's still a healthy market for Government of Canada bonds, and a very unhealthy market for other debt,” -- CIBC economist Avery Shenfeld (Globe)