September 24, 2020

BMO cuts 10-year mortgage to record low

First time a Canadian bank has had a 10-year posted rate below 4%
CBC News Posted: Mar 8, 2012 8:34 AM ET
The Bank of Montreal has again cut its 5-year mortgage rate to 2.99 per cent, the second time it has done so this year.

It has also cut the rate of its 10-year mortgage to 3.99 per cent, the lowest any of Canada’s big banks has ever offered on a 10-year mortgage.

This latest rate is available until March 28 and applies to mortgages with a 25-year amortization period.

TD Canada Trust announced a similar move Thursday, again offering a four-year rate at 2.99 per cent.

BMO first offered the 2.99 per cent rate on its five-year mortgages in January before pulling the offer after a few weeks. Some of Canada’s other big banks cut their rates as well to match BMO’s offer. However, BMO was the only to offer the 2.99 per cent rate on a five-year mortgage, whereas other banks offered it for four years.

TD’s latest rate cut echoes the move it made in January. While it matched the rate offered by BMO, one less year could make a significant difference for a prospective home buyer, particularly when it comes time to renew.

The slow fall of Canada’s mortgage lending rates Mapping the slow decline from 1990 through 2011Analysts have said fierce competition in the mortgage lending market has driven rates to record lows. However, this has eroded profit margins, forcing banks to look elsewhere for profits.

CIBC recently announced it was looking to sell its mortgage broker business to drive customers into branches and thereby increase profit margins.

While lower rates have been a benefit to home buyers, they have raised concerns among some Canadian policy makers. Bank of Canada governor Mark Carney has spoken about Canadians’ rising appetite for debt, while Finance Minister Jim Flaherty has repeatedly warned Canadians to get their financial houses in order.

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