Just over a week ago BMO executives had issued a warning to mortgage brokers, letting them know that they were going to beef up their mortgage sales force and focus on capturing market share. BMO is looking to kick their growth into high gear in response to feeling the effects of a sluggish market. In this case, their bite was worse than their bark. BMO is once again offering their 5 year fixed closed mortgage at 2.99%.
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The Bank of Canada (BOC) announced today (March 8th, 2012) that the overnight lending rate will remain unchanged for the 12th consecutive time over the last 18 months. The last time the BOC made a change to the overnight lending rate was back in September of 2010 with an increase of 25 basis points. The overnight rate currently lingers at 1 per cent. The bank rate is at 1.25 per cent and the prime lending rate also remains at 3 per cent.
Over the weekend the government announced new mortgage regulations that require federal financial institutions to revise the mortgage penalty disclosures they currently provide to consumers. Federally regulated financial institutions have until November 5th, 2012 to comply with these changes and compliance will be closely monitored by the Financial Consumer Agency of Canada (FCAC).
As if BMO’s 2.99% 5 year fixed rate that rocked the mortgage world wasn’t enough, they have now issued a public warning to brokers along the lines of “ready or not, here we come”. They’re looking to grow fins and be a shark in the market by building up their mortgage sales force and capturing market share. Plus, find out what really happens behind the mortgage scenes.
TD and RBC were supposed to have their promotional rates available on the 2.99 per cent four year fixed mortgage until the end of this month (February 29th to be exact). But low and behold, just two short weeks after BMO’s campaign ran its course TD and RBC took their promo rate off the table as well. Those rates are history now; in fact they did make history as being the lowest 4 year fixed rate on RateSupermarket.ca. If you are interested in a 4 year term from one of the Big 6, you are now looking at 3.39% (or more) which is 40 bps higher than the short lived promotional rate.
After the CMHC announcement hit headlines last week, a few lenders changed their guidelines for promotional rates offered. The lenders revealed that the promo rates are no longer offered for conventional mortgages anymore and they are only looking at high-ratio deals. CMHC claimed that their cap wouldn’t affect qualified home buyers nor would it affect the cost of buying a house. Ahemm… the last time I checked, putting LESS money down on a home to qualify for a lower promotional rate, increases the interest payments made over the life of your mortgage, thereby directly affecting the cost of buying a house!
Making headlines this week was Canada Mortgage Housing Corporation’s (CMHC) announcement that they are approaching the $600-billion cap set by the federal government (I would guess so considering they were backing nearly $541-billion in mortgages by the end of 2011). The main driver is an unexpected level of requests for portfolio insurance by lenders.
We said “goodbye” to the super low 2.99% 5 year fixed rates last week and said “hello” to a still very competitive 3.08% 5 year fixed rate this week. For most rate shoppers, this increase of 10 bps can be traumatizing. Consumers tend to drool over a mortgage rate that is even just a few percentage points (or more) below other advertised rates. But let’s not forget that not all low rates are what they seem. Some super low mortgage rates typically signal a no-frills product that isn’t fully loaded with the features and benefits that might be important to you. Is shopping for a mortgage rate just like buying anything else; you get what you pay for?
This past Tuesday the Bank of Canada had their first meeting of 2012 to discuss any changes they were going to make to the overnight lending rate. Low and behold … no change. This came as no big surprise to Canadians and the overnight rate remains steady at 1%. FYI the next meeting is scheduled for March 8th, 2012. How does this impact the mortgage industry exactly?
In the red corner… currently weighing in just under the Canadian Prime lending rate at Prime – 0.25%… the 5 year variable rate. And in the blue corner… currently weighing in around 2.99% (new rate advertised January 13, 2012)… the 5 year fixed rate. LET’S GET READY TO RUMBLE!!!!