Bank of Montreal (BMO) will raise the rate on its widely publicized 2.99% 5 year fixed mortgage rate in a couple of days. The “No Frills” mortgage has always carried restrictions including a “no-pay-out” clause, limited pre-payment options and a set expiry date. The current expiry date is set for tomorrow March 28th, and the bank has made it clear that it will not extend the date.
Although the mortgage rate is not lower than rates currently available in the market, it’s the only one that’s advertised and posted on the company’s website. For this reason it’s garnered a lot of attention, especially from the finance minister who has publicized his concern that low mortgage rates will hurt the economy in the long run.
Jim Flaherty called BMO personally to voice his displeasure at the bank’s public stance on their low 5 year fixed mortgage rate. Last week when Manulife bank promoted a similar low mortgage rate he had a member of his staff call to voice his concern. Manulife acquiesced and reversed their rate drop immediately. It appeared that BMO was immune to the Department of Finance’s bullying tactic, but it’s now evident that they just delayed their response.
Bond yields remain low and there’s currently no profitability reason for mortgage lenders to raise their mortgage rates. Don’t worry about missing the deadline on the BMO 2.99% offer, there’s better options out there for you and your next mortgage.