Bank of Montreal (BMO) has bumped their “no frills” 5 year fixed mortgage rate by 20 bps to 3.79% effective today. The move demonstrates the roller-coaster ride clients can expect if they choose the “no frills” option.
Less than a year ago, BMO made headlines by promoting this product at 2.99%. The move was so bold that it warranted a phone call from the Department of Finance who was concerned that low mortgage rates could overheat the housing market. None the less, BMO kept the 2.99% mortgage rate long enough to capture significant market share. Clients accepting the BMO special offer had to agree to onerous terms which included the caveat that they could not leave BMO for 5 years unless they sold their home.
BMO “no frills” clients now looking to renegotiate, refinance or port their mortgage must now face higher than market mortgage rates. As the old saying goes, “if it looks too good to be true, it probably is”. Make sure you speak with an independent mortgage broker before accepting a mortgage offer that looks too good to be true.