Newly minted Finance Minister said he’d be watching the housing market after the Bank of Montreal moved its five-year fixed rate mortgage down to 2.99 per cent from 3.49 per cent.
“Our government has taken action in the past to reduce consumer indebtedness and the government’s exposure to the housing market,” Oliver said in an email statement. “I will continue to monitor the market closely.”
In March 2013, BMO lowered the rate below the three per cent threshold, ruffling the feathers of Finance Minister Jim Flaherty, who called for “responsible lending” in what he saw as an increasingly frothy housing market. The bank’s 2013 decision to dip down to 2.99 per cent promotion ended after only a few weeks. It raised the rate to 3.09 per cent and later pushed the rate up to 3.79 in August. That initial rise inspired other banks to raise their rates too.
BMO is the first major bank to lower the key rate below three per cent since Flaherty’s departure, though BMO insisted the move had nothing to do with the former minister’s exit.
Paul Deegan, a spokesperson for BMO, said, “This rate change is driven solely by the fact that bond yields have fallen and we are in what has traditionally been the busiest season for buying a home.”
Other banks have also recently lowered their rates, with TD Bank’s four-year fixed-rate mortgage now sitting at to 2.97 per cent and Scotiabank lowering its rates with a four-year special rate of 2.94 per cent.