Bank of Montreal is cutting its mortgage rates, one of a number of lenders to do so this month.
BMO is cutting various fixed rates by 10 and 20 basis points, after Royal Bank of Canada cut many of its rates by 10 basis points this past weekend. Other lenders that have reduced rates recently include Home Trust and First National Financial LP. And Bank of Nova Scotia has cut its five-year rates by 10 basis points, according to an analyst at Ratehub.ca.
Mortgage prices tend to follow changes in five-year government bond yields (because those impact the price that banks pay to obtain money to lend out), and Canadian bond yields tend to follow U.S. bond yields, meaning that Canadian mortgage rates depend in large part on the outlook for the U.S. economy.
Yields began rising last May after U.S. employment numbers came in much better than expected, raising hopes for the U.S. economy. Then they shot up further after U.S. Federal Reserve chairman Ben Bernanke suggested the central bank could start tapering its asset-buying program, a signal that he thought the economy's health was improving.
While the U.S. central bank has begun tapering, December jobs numbers and some other recent data have been disappointing, and caused bond yields to fall.