BMO Drops 5-Year “Low Frills” Rate To 3.59%

BMO BMO continues to aggressively execute its new discount mortgage strategy.

It just sliced its 5-year fixed "low frills” rate from 3.79% to 3.59%.

It’s the lowest publicly-advertised 5-year fixed rate we can remember from a big bank.

BMO says this deal “saves homeowners over $60,000 in interest costs compared to leading competitors’ five-year special fixed rate at 3.89 per cent and 35-year amortization.” This estimate is based on the total projected interest costs of a $200,000 3.59% and 3.89% mortgage, over 25 and 35 years respectively. (The comparison isn’t wholly accurate because rates will change at renewal in 60 months.)

BMO has a great rate, no doubt.  But if you’re entertaining this offer, remember three things:

  1. The fine print. Barring sale, you can’t break BMO’s mortgage and go elsewhere. Most people do break their 5-year terms early. In addition, pre-payments are capped at 10% a year. See: BMO 5-year mortgage special
  2. Various competitors will match or beat 3.59% on a 5-year. Shop around!
  3. Depending on your rate outlook and risk tolerance, a 5-year term, even at 3.59%, is not necessarily the lowest cost option for the next five years. Talk to your mortgage planner and have him/her line up all the alternatives for you.
  1. Wow.
    Thanks for the heads-up CMT!
    This should hopefully force other banks to at least bring their advertised special rates to 3.79% … and maybe even cause posted to inch down a bit.
    With 5-yr swap rates still around 2.10%, banks should be able to survive 5.25% posted again, which they had briefly in March.

  2. I can’t help but feel a little taken by the banking industry when shopping for a mortgage earlier this year. Taking many people’s advice, I locked in for 5 years at 3.69% (Scotia – 1st mortgage, good credit and 20% down), and felt good about it. I mean, how could I not? Rates were going to skyrocket, any moment! Reality: no, they are not. Hindsight: shoulda went variable :)

  3. Look at rates the last 50 years. You got a gift at 3.69%. You have no idea what rates will be like one year from now so be happy with the great deal you have.

  4. here is a fun question. i closed on a mortgage this past monday with BMO @ 3.79. Anything i can do to get the 3.59?

  5. I agree with Winnipeg….earlier this year, 3.69% was a great rate and great advice.
    That, and you still would have been kicking yourself because you’d have probably only received prime minus .3% going variable at the time.
    If you want to start saving money, start with your rogers bill – likely more pennies to be earned there.

  6. I also early renewed my 5 year term from 5.39% with a blend and extend rate of 4.55% last week for another 5 yrs – should have waited too … I wonder when I can blend and extend again …

  7. Is that the lowest fixed mortgage rate EVER or at least in recent memory? I do not remember what the discounted rates were at the then historic lows in 2009

  8. Same feeling, … I’ve locked on 5yrs back in spring at 3.95%, … based on everybody anticipation of rates going up significantly.
    Probably I should have stayed on the variable :(

  9. I remember the guy who did my mortgage at one of the Big Six banks told me that last May he got authorization to do a deep discount 3.44% for one customer’s 5-year mortgage … I asked him how/why, he said that guy just pushed hard for it.
    But this 3.59% is damn close, and it’s available to anyone.

  10. the maximum amortization on this special is 25 years and you still have to qualify at the BOC benchmark rate, which is currently 5.39%.

  11. BMO goes out of their way to bold and underline that this “offer may be withdrawn…..without notice.” If bond yields rise from here you can bet BMO will readjust that rate quickly.

  12. nope, BMO aren’t nice guys. They won’t qualify you at the contract rate, even on the 5 year closed, they insist on using the BOC Benchmark rate even for their 5 year closed, which is 5.39%. So I wasted a hit on my credit bureau to try and get their 3.59! I am working with a broker and should be able to get under 3.7% on a 5 year closed with my 709 Beacon.

  13. not true Ken.If mortgage is 5 year or greater fixed rate,then qualify at the contract rate
    not so nice guy
    BMO mortgage specialist

  14. I just called BMO and was told they use 5.39% to qualify people for their 3.59% rate. I called ING earlier and they said they would use 3.89% to qualify me.
    Why does BMO use such a high rate? I thought the law only required it if the mortgage is variable or less than 5 years.

  15. Hi Gary, I spoke with a gentleman named Atif, who is an Internet Lending Manager and who responded to my online application. He was adamant with me that it was BMO’s policy that even for a 5 year closed, BMO still required customers to qualify at the 5 year posted rate of 5.39% and not the contract rate. He offered me a pre approval certificate for a lower amount, which I didn’t accept. However, he did refer my file to my local branch, who I may speak with after the long weekend.

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