Canada’s big banks have yet to lower mortgage rates after the central bank’s surprise rate cut this week, but once one of them does the rest will “clamour for the market share,” one expert says.

Bank of Canada governor Stephen Poloz surprised many observers Wednesday by cutting the bank’s overnight lending rate a quarter of a percentage point to 0.75 per cent.

Economists predicted a corresponding drop in mortgage rates, but the banks have yet to announce how they will respond to Poloz’s decision.

Penelope Graham, editor of ratesupermarket.ca, says that historically, banks have responded to rate cuts with a 25 to 50-basis point cut in their own prime lending rate.

However, because Poloz suggested that further cuts could be on the way, the banks “may be biding their time.

“They may be waiting to see where the Bank of Canada overnight lending rate may settle,” Graham told CTV News Channel on Friday.

She added that the banks in fact have little room to manoeuvre.

“With the average five-year variable rate at 2.5 per cent, cutting it from there might draw the ire of the Department of Finance for prompting risky borrowing practices,” Graham said.

In a briefing for reporters explaining his decision, Poloz warned that household debt levels continue to concern him and he does not want to see Canadian families take on more debt. However, his primary aim with the rate cut is to open credit channels for non-energy sector businesses that are looking to expand, including hire more staff.

Meanwhile, banks may also be waiting to cut rates until after Jan. 31, when many homeowners will already have refinanced their mortgages.

“They’ll do that to protect their profit margins,” Graham says.

But a rate cut will come down to competition, she says.

As the spring home-buying season heats up, some of the discount lenders may reduce their rates and the big banks won’t want to lose customers.

“So they’re waiting to see who’s going to make the first move,” Graham says, “and when that happens they’re going to clamour for the market share.”

Finance Minister Joe Oliver said Friday he has no intention of pushing Canadian banks to follow the Bank of Canada's lead and drop their rates.