When Bank of Montreal announced on Wednesday that they were lowering their rates to an unheard of 2.99% for a 10-year fixed term, and 3.99% for a 5-year fixed term, many experts believed that other banks would be quick to follow. Yesterday, we found out that they were right.
The Royal Bank of Canada, TD Canada Trust, and CIBC all announced late yesterday that they too, have slashed their mortgage rates and are now offering almost the same deal that BMO is. All three of these major lenders have dropped their interest rate on 4-year terms to 2.99% to match the original offer put forth by the Bank of Montreal. However, just like the first time this mortgage war began this year, the deals don’t really match. Again BMO is offering the 2.99% on 5-year terms, one year longer than the other banks. And that’s not the only difference.
While BMO has stated that their mortgage discounts will be available until March 28, 2012, the other banks haven’t yet given a timeline for their deals; and they most likely won’t. Not many have forgotten about when all other banks, except BMO, pulled out of their mortgage deals early in January, citing an increase in government bonds and a loss of profits as a reason. But even with those factors, BMO still managed to keep their deal on the table for the entire time they promised. The other major banks have found a way around angering consumers and embarrassing themselves though. This time, all they’re saying is that the deals are being offered “for a limited time and may be withdrawn, changed, or extended at any time. You shouldn’t count on them being extended though. The competing banks most likely aren’t happy with this latest move.
Especially when you consider the last time BMO started a Canadian mortgage war. At that time, RBC’s head of Canadian retail banking, David McKay, called BMO a “mortgage attacker,” something that shows competitors aren’t happy about being pressured to offer deals that will cut into their profits.
It’s also interesting to see that all of these announcements came yesterday, at about the same time the Bank of Canada was once again warning us about taking on too much debt. Not long before the announcement was made that the overnight lending rate would remain at 1%, the bank also reminded us to stop taking on so much credit debt and other debt in the form of home equity loans and lines of credit. And attached to the statement about the rate, the bank also cited that “rising household debt was the biggest threat to the domestic economy.”
