Canada's Biggest Banks Raise Prime Rates to 3.2% After Central Bank Hike

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Canada's biggest banks said on Wednesday they will raise their prime lending rate by 50 basis points to 3.2%, a two-year high, following the Bank of Canada's benchmark rate hike, moves that could rein in the country's red-hot housing markets, Reuters reported. The country's four biggest banks - Royal Bank of Canada , Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal - said the higher prime rate, which variable-rate mortgages are tied to, will come into effect on Thursday. Variable-rate mortgages have grown in popularity as the gap between these and fixed-rate mortgages has widened over the past several months. They accounted for 55% of all mortgages, according to Bank of Canada data. The central bank raised its overnight rate on Wednesday by half a percentage point to 1%, the biggest single move in more than two decades, and said more hikes are coming. Read more.