Banking in Canada can be a murky subject – one that we hope to shed some light on with a series of highly informational articles.
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BMO reintroduces 2.99% 5-year, fixed rate mortgage
– moneysense.ca
Image courtesy of Stuart Miles / FreeDigitalPhotos.netTORONTO – The Bank of Montreal has slashed its five-year, fixed mortgage rate to 2.99 per cent, a level that had previously raised concerns about it leading to an overheated housing market.
The bank (TSX:BMO) says it will offer the new rate until Sept. 30.
“This rate change is driven by the fact that bond yields have fallen and we are in what is another busy season for buying a home,” said BMO spokesman Paul Gammal on Wednesday.
Previously, BMO’s five-year, fixed rate had been 3.29 per cent.
The bank raised concerns from Ottawa when it offered the 2.99 per cent rate in March 2013. The move sparked a personal phone call from then-finance minister Jim Flaherty, who publicly chided the bank for lowering its key five-year rate, saying that he believed in “responsible lending” and was worried that the low rate would result in a race to the bottom with the other major banks.
Flaherty’s general concern was that the low rate would encourage Canadians to take on unsustainable loans and work against the government’s efforts to slow the momentum of the housing market…
