Canada’s big banks are engaging in an old fashioned mortgage war as they try to outdo one another with discounted rates on mortgage loans.
The latest salvo was fired on Tuesday by Bank of Montreal, which announced that it is offering a five-year variable rate of 2.45% until the end of May — one percentage point below its prime rate. The special marks the biggest widely advertised discount ever by one of Canada’s six largest banks, according to mortgage rate comparison website RateSpy.com.
Bank of Montreal’s offer beats rates of 2.75% for similar mortgages by other lenders such as Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia, and is also better than the advertised 2.49% variable rate offered by HSBC Holdings.
The rate is “reflective of the competitive environment,” said Paul Gammal, a Bank of Montreal spokesman, in an e-mailed statement to media.
Fixed mortgage rates have crept up in the past week following a rise in bond yields, with typical discretionary rates of around 3.49% — which is 10 basis points higher than in January. Posted rates are higher still, with Toronto-Dominion Bank pushing its five-year rate up 45 basis points to 5.59% in one of the biggest increases in recent years. Scotiabank moved on Tuesday as well, lifting its rate by 20 basis points to 5.34%.
