BMO took the first shot over the bow a number of weeks ago when they came out with their 2.99% fixed rate for 5 years. The other four’s 2.99% fixed rates are for 4 year terms, but have other bells and whistles that are not part of BMO’s offering.
With reports that housing purchases are on the decline, the hyper competitive residential mortgage market is going after the mortgage refinancing, mortgage renewal segment of the market to retain and potentially grow market share.
And even with Bank of Canada reports that consumer debt in Canada sits at too high a level on average, mortgage money just got cheaper which could push the average debt even higher.
Lower cost fixed rates also provide the opportunity for those that have been riding the variable rate for the last decade to lock in for 4 to 5 years and reduce the risk of rates shooting up. With the difference between the 2.99% fixed rate and variable rates being around 0.6%, the time has never been better to lock in a fixed rate.
And with those who have a high level of debt, but not necessarily the lowest average rate of interest, these new 2.99% fixed rate offerings can provide the opportunity to reduce overall debt over the next several years with the same cash flow by reducing the overall cost of interest on an annual basis.
Its not exactly clear how long these rate offerings are going to last, so if you are looking at buying a new home, down sizing, consolidating debt, or moving to a lower fixed rate, it could well be worth the exercise to crunch the numbers for each of these programs and sign up for either a 4 or 5 year 2.99% rate mortgage.
In order to make the best decision now or in the future with your mortgage, we strongly suggest working with an experienced mortgage broker who can provide independent advice and help you with your mortgage financing requirements.