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BMO cuts mortgage rates again amid real estate slowdown

BMO cuts mortgage rates again amid real estate slowdown

The Bank of Montreal has cut its five-year mortgage interest rate to 2.99%;an all-time low for the bank introduced last January. The move will likely entire more buyers into the market.
The Bank of Montreal has cut its five-year mortgage interest rate to 2.99%;an all-time low for the bank introduced last January. The move will likely entire more buyers into the market.
Photo Credit: Scott Olson , Getty Images

The Bank of Montreal is lowering its rate for a five-year fixed mortgage amid concerns about a cooling housing market.

Effective immediately the rate will drop to 2.99 per cent from the current 3.09 per cent.

The other big banks could follow suit.

The rate cut touches an all-time low for BMO, which first dropped its lowest advertised mortgage interest rate to 2.99 per cent last January. The move provoked other major lenders, namely the country's other big banks, to match and prime further demand in the housing market, especially in red-hot markets like Toronto.

The banks brought rates back up following public warnings from Ottawa about Canadians taking on too much debt.

The move off ultra low interest rates on mortgages combined with new and tighter standards on lending that took effect last summer has cooled the market, data suggests.

Last month, Canada Mortgage and Housing Corp. said new housing construction is expected to be lower this year due to moderate economic and employment growth in the second half of 2012.

The Teranet-National Bank index of Canadian housing prices in January continued to show the effects of slowing demand.

The index was at 153 last month, up just 2.7 per cent from January 2012 — the lowest 12-month growth rate since November 2009.

BMO is lowering its rate again ahead of the busy spring selling season, a move that will entire more buyers into the market while encouraging them to take on larger mortgages than they might otherwise have if rates were higher.


With files from Canadian Press


Source: Global Montreal | BMO cuts mortgage rates again amid real estate slowdown