Canada has already seen its share of mortgage wars between lenders across the country. Back in January, BMO dropped their rate to a historical low of 2.99% on a five-year fixed term, and all the other major banks followed suit. Then they did the same thing in March and once again, most of the Big Six banks also slashed their mortgage rates in order to entice customers. Now the banks are at war again and this time, it’s the Royal Bank of Canada (RBC) that declared war.
On Wednesday RBC dropped their rates on five-year fixed terms to 5.34 per cent. Not exactly the rock-bottom lows that were seen earlier in the year but still a discount no less, and still something that may have homeowners and homebuyers considering RBC over any other bank. But two of the other Big Six’s, Toronto Dominion Bank (TD) and Bank of Montreal (BMO) weren’t going to let RBC sit at the top alone. On Thursday, TD and BMO also dropped their rates to the same 5.43 per cent.
The rate isn’t close to the 2.99 per cent the banks were offering at the beginning of the year. But there’s little doubt that the news is going to be good for homeowners and homebuyers who want to get the lowest possible rate before rates go up – which is predicted to happen as early as this fall. But how will those, who are already concerned about mortgages in Ottawa, react?
Just last month Jim Flaherty was concerned about HELOCs, home equity loans, and other types of mortgage debt. He came out last month and spoke about how the banks were being “irresponsible” in their lending practices.
“You should be cautious about your lending practices, because this is they type of practice that led to a mortgage crisis in the United States several years ago. So my expectation is that you will not compete to the bottom on interest rates, which is the direction he was going,” Flaherty said in April.
While there is no current expiry date for RBC’s five-year term mortgage, they also dropped their seven year fixed term to 3.99 per cent. This deal ends May 31, 2012. TD’s seven year rate remains unchanged at 6.35 per cent; and BMO’s seven-year rate currently stands at 5.99 per cent.
What do you think about this latest, albeit milder, mortgage war in Canada? Do you think that anything that makes it easier for the homebuyer is a good thing in Canada right now? Or do you agree with the Finance Minister, and think it’s time for the banks to stop encouraging people to borrow so much?
