2.99% Back at BMO, for 1 Day

BMOBMO’s 2.99% 5-year fixed special is back, but this time BMO is not heavily advertising it.

According to the BMO reps we talked to, it’s available for “one day only” (Saturday Sept. 22) and applies to BMO’s restrictive Low-Rate mortgage.

The reps said they just found out about the special yesterday and were told to direct people to the branch to apply.

We’re not surprised that BMO isn’t promoting this more. The Department of Finance has warned banks about advertising rock-bottom rates.

Back in May, Finance Minister Jim Flaherty told the Globe & Mail that aggressive rate sales were “something we discouraged.”

He said he told the banks, “My expectation is that you will not compete to the bottom on interest rates.” Doing so could over-stoke the national debt fire, suggests the Department of Finance.

But officials have done little to stop bank competitors from pushing ultra-low rates.

As we speak, numerous other sources (brokers, credit unions and wholesale lenders) offer that same 2.99% rate, with fewer restrictions. The government’s distaste for aggressive rate promotion is therefore working in favour of bank rivals.

Rob McLister, CMT

  1. Not advertised? There was a pretty big ad on the radio yesterday morning promoting the one day rate sale! It specifically mentioned the 2.99% rate….with restrictions, of course.

  2. Thanks everyone,
    It’s more accurate to say BMO is not “heavily promoting” it. In this case, it intentionally minimized media coverage by not issuing a press release, limited the promotion to “one day,” put nothing on its website (it’s still showing 3.09%), and kept the whole thing low profile until the last minute. That’s quite a difference from its last two 2.99% campaigns.

  3. This. “limited time” offer reminds me of car sales. The banks have money they need to get out there earning money so they market the rates to make them look special. Are these one day “sales” the future of mortgage rates?
    R. Boswell

  4. I feel bad for the people stampeding into the branch thinking this mortgage is a deal. Read the fine print! You can call any bank and get a similar rate without strings attached.

  5. Now more than ever as mortgage agents and brokers we MUST show and deliver value to our clients. While this “rate sale” may attract a certain type of client, having a system in place that presents a value proposition in the market can combat these one off rate specials.
    I provide education to my clients that BMO will NEVER spend the time explaining. Topics include how to build credit, budgeting exercises, un-mortgage plans, and accountability calls to ensure plans and goals are being met and measured.
    I use a software debt elimination tool called InterestBLOCKER to provide detailed reports of what’s possible and show my clients firsthand how to become mortgage and debt free years sooner. I get most of my referrals from Realtors because they know my focus is to help their clients build equity and eliminate debt!

  6. One difference is that car dealers can freely advertise great rates. I saw a commercial last week for 0% financing for 7 years. Meanwhile banks get chastised from regulators when they advertise 5 year rates below 3%. It’s silly.

  7. Most Mortgage Specialists are not properly qualified, certified, independent or have the proper liability insurance necessary to be providing professional financial advisement to their clients.
    Your cheap plug for your own flawed software is one dimensional since a solid and comprehensive financial plan is not solely based on eliminating your mortgage and all debt while building home equity. Proper diversification and risk balance of your asset mix is key.

  8. I feel this promotion was a sham and tried to make people make a very quick decision on this “1 day only” fire sale.The last thing that consumers need is to be pushed into a mortgage on the spot. Myself and most other mortgage agents have 2.99% as an option for consumers each day. They are mortgages with all the regular options. Mortgage agents take the time to explain to a consumer all their options and try to find the best mortgage for their financial needs.

  9. In all probability these sales will be gimmick days for the likes of BMO. Most lenders raise or lower their rates according to the bond yields.
    Canadian 5 yr bond yields markets -0.04 to 1.39 The spread (based on a 5 yr published rate of 3.29%(example)) is within the comfort zone at 1.90%. The rate of return on your bond, can be read through a yield curve, If the increase in bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. The comfort zone is between 1.90 and 2.10

  10. I’d advise the average Canadian to pay off their debt and mortgage as quickly as possible. You can’t rely on stocks or the government safety net anymore. People need to have a paid off home by retirement to reduce risk.

  11. Banker: In Ontario we can only advertise as mortgage agents or brokers – not specialists. All are qualified through courses and continued professional development.We are licensed by FSCO (Financial Service Commission of Ontario) on a bi-annual basis. We belong to one of 2 professional associations (CAAMP or IMBA) and certainly are required to have liability insurance (E & O)which is paid on a yearly basis. We are licensed to provide advise on all aspects of mortgages and then allow the consumer to choose which type of mortgage they would like. We leave it up to licensed financial planners to assist the consumer with an overall plan for building up their assets over time.
    Perhaps next time you might want to check the facts before printing inaccurate statements.

  12. Then we agree, you “are licensed on all aspects of mortgages” but are not licensed financial planners. Much of what Derik referenced is financial planning!

  13. Some aspects of dealing with credit poor clients is a form of financial planning. We can show them the benefits of increasing their payment frequencies and/or decreasing the amortization terms.We can show them what credit cards are high interest and suggest ways to lower them, especially if we cannot place them with a lender . ie: take on a second job and/or reduce spending. Perhaps they have a outstanding collection and we advise them to pay it off. Our “financial advice” is related solely to trying to help them raise their Beacon score so they can be placed with a lender at some time in the future. You can read any newspaper and you will find articles on how to manage credit and raise your score. What we are NOT doing is advising them on where to allocate their investing funds -ie stocks, mutuals etc. If they want to do a form of the Smith Manoveur all we do is set up the mortgage. They MUST register with a licensed financial planner to determine how to allocate the funds.
    If you go to Derik’s website and look at the software description to me it is not doing the job of financial planners. It is dealing with mortgages.
    When a person receives a mortgage they will receive a printout of each payment showing how much is interest and how much is principal. Is the trespassing on the turf of a FP? I think not.
    Nowhere in Derik’s comments is he advocating pathways taht only a FP can recommend.

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