Following Suit of Some Other Canadian Banks, BMO Lowers Fixed Mortgage Rate
The latest on mortgage rates from the Globe and Mail (in an update by Andrew Binet) is that Bank of Montreal (BMO) just lowered mortgage rates by one-tenth of a percentage point on most terms up to 10 years.
The new rate for a five-year fixed closed mortgage will be 5.79 per cent, that’s down from 5.89 per cent. Other rates being adjusted lower were the BMO’s six-month fixed convertible and its two-, three- and four-year fixed closed rates. This new rate matches the rate at the Royal Bank of Canada. However, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and TD Bank have left their rates unchanged at 5.79, having just lowered them to that level on June 24. The interest rate for a fixed rate mortgage is calculated half-yearly not in advance.
Per the update from Mr Binet, a brief overview of trends in the consumer mortgage marketplace:
A recent survey by TD Bank found that nine out of 10 Canadians who have just bought or are about to buy their first home intend to take out a mortgage. Only 30 per cent of respondents said they plan to or already have more than a 20 per cent down payment on homes. Over 70 per cent of respondents will require mortgage insurance.
This is the second revision downward in just a few weeks’ time. The timing of these drops seems in line with larger trends that may reduce demand for consumer mortages, especially since the new HST took effect in the nation’s largest real estate markets. This could potentially put a damper on the housing market, making consumers more hesitant to make the jump.
In addition, as we discussed in an earlier post, there are other factors weighing on the housing market including changes to the mortgage insurance scheme. The column that we discussed in that post also suggested that government was determined to combat any overheating in the real estate market, so perhaps the timing of the HST is part of that plan.
However, he banking community continues to foresee a general rise in mortgage rates-so perhaps this downward movement is a blip, which would mean there’s no time like the present to lock in low rates or think about refinancing.
