Canada Flag by Alex Indigo
Record real estate sales may go on for months more, with the lowest interest rate introduced to the market in Canada. The Bank of Montreal cut its five-year, fixed-rate mortgage by 0.5% to 2.99%.
If you want to take advantage of the offer, you should hurry up, since the mortgage rate is only available until January 25. Naturally, it comes with some conditions, including a 25-year amortization period and lump sum payments of maximally up to 10% of the principal each year. It means the mortgage is very cheap, but you need to fulfill certain conditions to qualify for it.
It is an interesting option for new homebuyers, but also for people seeking to refinance their existing mortgage. While the offer will finish in a bit more than a week, other competitors will probably try to match it. By Friday, Toronto Dominion Bank already responded, dropping its four-year, fixed rate mortgage to 2.99%, which will be valid until February 29.
This step will probably fuel price growth on the real estate market some months more. Banks are able to set the rates so low, because they are selling bonds in the international market at record-low prices, mainly thanks to the instability in Europe, which causes investors to turn to safe heavens, like Canada.
A week ago, BMO sold $1.5 billion worth of bonds at a rate of 2.54%. More information on The Whig.