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A List of Canada’s Major Banks Reduced its Fixed Mortgage Rates


The mortgage rates in Canada stayed at a low level the entire year than the previous year. However, such consistency recently changed when some major banks in the country decided to drop their rates, which are even lower to raise consumer interest within the mortgage market. It all started with the step taken by the Bank of Montreal, which reduced its 5-year fixed mortgage to 2.99%. Then, it was immediately followed by a number of other banks as an attempt to keep the pace with them. Overall, this mortgage rate which Bank of Montreal decided on settling with is considered as the lowest in the Canadian history, involving major banks.


This offer of BMO is scheduled to end in January 25. Among the other major banks that immediately worked on reducing their mortgage rates is TD. In their case, they lowered their 4-year fixed rate to 2.99%, which took place on Friday afternoon. TD’s offer will only be applicable up to February 29, 2012. After the mortgage rate reduction implemented by TD, it was instantly followed by Scotiabank and Royal Bank.


Lower mortgage results are explained as the results of a certain broader trend, which also serves as an action and opportunity that international investors are taking advantage of. John Andrew, an expert in Queens University real estate explained that this is not a surprising occurrence. This is the case considering that the decline in mortgage rates have been lagging behind the falling bond yields. It is simply driven by the uncertainty in the global economy.


Just earlier this month, BMO sold about 1.5 billion of 5-year bonds at a rate of 2.544%. On the other hand, Italy was able to sold bonds at a 4.84% yield. Given this fact, the experts explained that this is because the bond market sees BMO to be better than Italy. A lower yield only indicates that investors are more confident with the ability of the lenders to live up to the loan’s stated term. At this point, Canada serves as a function of whatever that occur in the global environment. The big advantage of this is that mortgage consumers are brought with some benefit from it. Not just in Canada; but, even across the world.


The world recognizes that Europe is now experiencing debt crisis. This leaves investors fleeing for their safety. At this point, Canada is seen as the provider of hope in the financial world. Hence, it is not surprising that the bond offerings from the biggest lenders in Canada are also in a strong demand. Cutting consumer rates is a strategic move on the part of these banks to find and gain new customers.


Another reason why the major banks in Canada lowered their mortgage rates is because the demand for it is slower within the first few months of the year. Reduction of mortgage rate has become a strategic move for banks in order to outpace the competing banks.


There are also other benefits that lowered mortgage rates can bring. It helps in keeping the demand on real estate stable since there are professionals who have already commented about the slowdown in the market in 2012. However, even with lower rates, prospective homeowners are still recommended to consider available loan options. They should gain a complete understanding about the right price range before making a decision and taking a step.

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