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The sucker's bet on housing is to pounce on that five-year, 2.99-per-cent mortgage deal offered so controversially by Bank of Montreal.

Oh, it's a great rate. There's next to no chance over the next five years that you'll kick yourself for having chosen to lock in such a historically low cost of borrowing. But the low-rate argument for getting into the housing market for the first time just isn't compelling enough to jump in right now.

For one thing, no one expects rates to move higher any time soon. The Canadian economy, not to mention the global economy, simply can't handle higher rates right now. They'd smother growth.

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Second, there is a very real chance that housing prices could decline further. On Monday, the analysis firm Fitch Ratings said Canada's housing market is overvalued by about 20 per cent across Canada. Fitch isn't saying housing prices will necessarily drop by that much, but its view does suggest caution for those who think the housing market will rise like daffodils when spring comes.

Note that we're talking about a pullback in prices, not a crash. The debate over the housing market is too often framed as being crash or boom. There is a middle ground possibility of price stagnation or modest declines.

The smart play for a first-time buyer right now: Start checking out what's available in your price range in the neighbourhood or community you like. Get a sense of pricing and then wait to see what happens through the spring.

Don't worry about missing that 2.99-per-cent rate while you're on the sidelines. A quick survey of rates shows that it's possible to set up a five-year mortgage for as little as 2.79 per cent from the sort of lenders that mortgage brokers deal with. Looking ahead, rates may move around a bit, but a big surge higher from current levels seems unlikely.

BMO's rate isn't quite the lowest out there, but the bank has been taking all kinds of guff over its decision to lower its five-year rate from 3.09 per cent. Finance Minister Jim Flaherty even warned the banks to engage in "prudent lending," which is odd because aggressively low rates are a benefit to borrowers.

Mr. Flaherty has already urged Canadians to engage in prudent borrowing, and it seems people have listened. Growth in borrowing rates has tapered way down and the numbers from late last year suggest we're back to levels last seen in 1993. This is a big part of the reason why the housing market has slowed in some parts of the country.

First-time home buyers, this trend is your friend. Don't rush into the market just because a big bank is stirring things up with a great mortgage rate.

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