BMO apparently no longer dreads “the phone call.”
That, of course, refers to the infamous calls from the Department of Finance discouraging banks from pricing below 3 per cent. Former Minister of Finance Jim Flaherty seemingly took pride in those calls, publicizing them in the media.
But the Flaherty era is now over and, coincidence or not, BMO is back in the 2.99% business.
BMO’s current 2.99% special is far from the lowest 5-year fixed rate in the market. Brokers and non-bank lenders have been sub-3% for a while now.
Moreover, BMO’s rate only (officially) applies to its restrictive “Low Rate” mortgage. That product’s limitations include a fully-closed term (barring bona fide sale or refinance with BMO), a non-discounted penalty calculation, lower pre-payment privileges (10% annually), lower optional payment increases (10% annually), no optional HELOC (ReadiLine), no BMO Cash Account (a great feature), no Skip-a-payment and a 25-year maximum amortization.
That said, you can bet your deed that BMO and/or other banks will come very close to 2.99%, if not match it in some cases, for a full-featured mortgage.
The 2.99% rate has become a psychological benchmark in mortgage pricing. It’s the number that many remember most when evaluating the rate they’ve negotiated.
BMO has been incredibly successful at using this number to its advantage, getting media play at every opportunity (latest example).
Its spread on this mortgage is currently 130 basis points over the 5-year government bond. Until recently, 150+ bps has been more normal for 5-year money. That suggests BMO and the other banks are stepping up their games in the key spring buying season.
Rob McLister, CMT (email)
Last modified: April 25, 2014
Now that it’s safe to come out of the closet maybe Manulife will relaunch its 2.89% rate?
And with their pricing at 2.99%. 130 bps below their posted…..what would a potential payout penalty look like for a client that had to break the term? Astronomical!
BMO makes no bones about this being a “No Frills” product with a hopelessly adverse “break” policy,they are VERY upfront about it. We cannot say they are bad about disclosure because they are not. It is all right there in their newspaper ads.
do they offer this rate for renewals also? im currently on a 3.44 rate for 22 more months, hoping to get at least 3.44 or less on renewal with BMO.
how far in advance do they offer a renewal rate?
It’s actually 2.0% below posted – REALLY astronomical.
Looks like 90 days.
“If your mortgage is up for renewal soon, we will call you approximately 90 days before your mortgage maturity date.”
http://www.bmo.com/home/personal/banking/mortgages-loans/mortgage/renew-mortgage/renewal
Probably 4 months max
Why would you accept 3.44% when no-frills are 2.99% and full feature just over 3????
because I signed the mortgage 3 years ago when the best rate was 3.44%………..
This is interesting, perhaps rates will become even more competitive now and housing prices will continue to rise.
Diddy – Advent has a 5 yr cl. for 2.83 % ( usually with 20 / 20 on the pre-pymts) Butler Mortgages and True North Mortgage are also very competitive.