Mortgage broker Calum Ross thinks Canadian consumers are being short-changed.
On Wednesday, the Bank of Canada slashed its overnight rate to 0.5 per cent. That puts the cost of borrowing at an historic low. But so far, banks have only passed on a fraction of this week's savings to frontline consumers.
Ross says highly-profitable banks have no real justification for pocketing the difference between Wednesday's Bank of Canada cut and their own lending rates.
"It's tough to argue that it's anything but [a money grab]," Ross tells As It Happens guest host Laura Lynch. "This does go directly to their profit margin. Being completely fair, the banks in Canada are not short of profit."
Before the 2008 financial crisis, the banks usually matched cuts in interest rates by the Bank of Canada. Since then, it's been less predictable.
When the Bank of Canada last cut interest rates in January, it was by 0.25 per cent. The banks followed by cutting only 15 basis points. This week, the trendcontinues.
"There are some people who are saying they are building future loss provisions because, obviously, there is a lot of consumer debt in the economy," Ross says.
He doesn't buy that argument.
