Of course, brokers and banks alike have had similar rates on offer for months, but any time an institution posts a rate below three per cent, homebuyers notice.
“This rate change is driven by the fact that bond yields have fallen and we are in what is another busy season for buying a home,” a spokesperson for the Bank of Montreal told Business in Canada. “The offer provides certainty of fixed payments for 5 years at a great rate.”
Bank of Montreal made headlines in 2013 with its “2.99 no-friller” mortgage product that is widely considered to be the catalyst for record-low mortgage rates Canadian homebuyers have enjoyed for over a year.
The promotion didn’t last long but this year a number of lenders have joined the discount rate fracas with promotions of their own.
Industrial Alliance offered a standard 2.99 per cent five year fixed rate in February of this year.
And in early June, Duca Credit Union announced it had dropped its five-year fixed closed mortgage from 3.09 per cent to a competitive 2.99 per cent and that the reduction would also be applied to any deal negotiated within the past 30 days.
The retroactive rate rejigging had no effect on broker commissions for those prior deals.
It remains to be seen whether any other big banks will follow the lead and cut their own posted rates.
Brokers will likely experience a number of inquiries about sub-three per cent mortgages in the coming days, following the return of one major bank’s 2.99 per cent five year fixed rate.