Mortgage rates for a five-year term have dipped below 3% for the first time in Canadian history at a major bank.
Bank of Montreal has lowered the rate on a five-year-fixed rate mortgage by 50 basis points to 2.99%.
“That’s the lowest anybody has ever seen from one of the major lenders ever,” said Rob McLister, editor of Canadian Mortgage Trends.
He said the BMO product called the “low rate mortgage” comes with some reduced flexibility. Instead of being able to pay 20% of the mortgage down in one year in a lump sum payment, you can only reduce by 10%. You can also only increase your monthly payment by 10% instead of the traditional 20%.
The product is being offered on a limited basis from Jan. 12 to Jan. 25, but Mr. McLister doesn’t expect that to mean much because already the Royal Bank of Canada has pledged to mortgage brokers to match the BMO decrease.
TD Canada Trust also moved ahead with its own discount Wednesday, lowering the rate on a six-year fixed rate mortgage by 132 basis points to 3.79% and on a seven-year fixed closed mortgage by 91 basis points to 3.99%.
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