Bank of Montreal will not extend its 2.99 per cent five-year fixed mortgage rate offer past its expiry on March 28, with the country’s lenders under pressure from Finance Minister Jim Flaherty not to engage in a mortgage price war.
Consumers can still obtain lower rates than this from a variety of mortgage lenders, including other large banks, which routinely offer discounts from their posted or advertised rates. But Bank of Montreal was the only one of the big five banks to cut its posted rate on five-year fixed mortgages below 3 per cent, a move that it advertised heavily.
The bank has long lagged rivals when it comes to market share in the mortgage arena, and has been seeking to get ahead. Mr. Flaherty appeared to be concerned that borrowers would be persuaded to take on more debt than they can chew, potentially heating up the housing market, which he has been seeking to cool.
Bank of Montreal put out a news release Tuesday saying it is “increasing” its rates effective March 29 by allowing its special rate to expire as previously announced. The posted or advertised rate will revert back to 3.09 per cent, the level it was at before the bank cut it to 2.99 per cent earlier this month.
Last week Manulife Bank announced it was cutting its five-year fixed rate to 2.89 per cent, but changed course one day later – bringing it back up to 3.09 per cent – after receiving a call from an official in Mr. Flaherty’s office, which felt the move was unacceptable.