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BMO Bank of Montreal Mortgage Rates Hit All Time Low With 2.99% 5 Year Fixed

Jan. 13, 2012
5 mins
A BMO branch with Canadian flags waving in the wind

Bank of Montreal (BMO) shocked the mortgage market by dropping its Low Rate 5 year fixed mortgage to 2.99% effective today, January 14, 2012.

It is a limited time offer that is available only until January 25, 2012. This is the all-time lowest fixed mortgage rate we've seen offered by a big bank, and is a fundamental shift in strategy in the market as big banks look to take market share by enticing customers with lower mortgage rates versus selling customers on their personal advice and the benefits of having all their products with one company.

TD mortgage rates also dropped today as they lowered their special discounted rate on the 4 year fixed product to 2.99% as well.  Expect more of the banks to follow suit in the next few days. 2.99% 5 year fixed mortgage rates were offered by mortgage brokers late in 2010 but they have never publicly been offered by a major bank like BMO.  'Publicly offered' is the operative term here as bank mortgage specialists and the branches do have the discretion to drop rates for certain clients.

These lower fixed mortgage rates have been expected as the benchmark government bond yields have headed lower in the past few months and even dropped almost 3.4% today (Jan 13, 2012), while the banks have held their mortgage rates steady.  This has given them a nice spread between the two, increasing profit margins.  Our Mortgage Rate Outlook Panel of experts thought we would see this mortgage rate trend for lower rate fixed products this month and they proved to be correct.

Here are details for the BMO Low-Rate Mortgage:

  • 5 year fixed term
  • Only 10/10 pre-payment privileges (vs 20/20 on other BMO products)
  • Maximum amortization period: 25 years
  • You can't refinance or switch to another mortgage lender before the 5 year period is over
  • Not available on non-owner-occupied rental property
  • You can see all BMO Bank of Montreal Mortgage Rates here.

This is a low rate product that could work for those that are certain on what the next 5 years will bring, but as most Canadians typically transact on their mortgage every 3 years or so, this may not make sense for most homeowners.  If you're looking for more flexibility, you may want to compare this against the best mortgage rates in your province to see what other offers are available that may be better suited to your own situation.

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