After a hugely successful pricing campaign for their low rate, five year mortgage product offering, BMO has come back down to earth today and reset their rate to a more typical (for them) 3.49%. The past few weeks have been frenetic in the mortgage industry, as their limited time special offer of 2.99% galvanized what is typically a quiet month in the business.
As the banks normally do, BMO’s website shows their “posted rate” of 5.29% (specially for unsophisticated buyers and some BMO mortgage renewals) They also display their new ‘low rate’ of 3.49% – which overnight has gone from being market leading to somewhat uncompetitive.
[important]It will be interesting to see where the dust settles now that every lender and mortgage specialist is no longer trying to contain a frenzied mortgage customer base who wanted their share of the lowest mortgage interest rate in Canadian history. I suspect there will be a lot of fine tuning of rates by all lenders in the days to follow – so if you are thinking of refinancing, best talk to a mortgage broker agent very quickly, while the going is still good.[/important]
When I woke up this morning, I was still able to offer 2.99%, fixed for five years, for clean, clean deals which close within the next sixty days. And this is NOT a low frills product offering.
2.99% for four years is also pretty standard, and a few lenders are promoting three years at 2.89%. Normally, brokers would not recommend a three year product – but it helps for clients who are fanatical about having secured the lowest rate possible (allows for posturing at cocktail parties), and some lenders boosted their commissions from 50 basis points up to 70 basis points to lessen the pain for the broker agents.
Stay tuned. We will see if this was a one shot deal by BMO, or whether or not it was an opening salvo in a new era of aggressive pricing and open warfare in the battle to secure new clients. This will be especially important if it is true that Canada’s housing market will cool off this year, and volumes everywhere decline. We will all be competing hard for fewer new deals.