As anticipated, the Bank of Canada (BoC) raised its key lending rate by 0.25 percentage points this week, marking an end to the record low interest rates Canadian benefitted from this past year.

Lenders are now expected to follow suit and raise their prime rate by 0.25 percentage points. For homeowners on variable mortgage payments this means that their payments will increase by approximately $12/monthly payment per $100,000 of mortgage.

TD was the first of the Big 5 Banks to increase their prime rate by 0.25 percentage points to 2.50%. This increase was announced on Tuesday and took effect on Wednesday June 2.

Economists from the Big 5 Banks indicated that the prime rate is expected rise further this year by approximately 1 percent to 3.25% by the end of 2010, with further increases come 2011. 

 The next scheduled date for announcing the overnight rate target is 20 July 2010.