Banks draw down in mortgage battle
June 05 2018
While the Bank of Canada held its trend-setting overnight lending rate at 1.25 per cent at its May setting, major banks have drawn down in a mortgage rate war.
But consumers may have to get in early.
“Canadian banks are offering a full 1 per cent discount off prime in certain circumstances,” noted mortgage broker Peter Kinch, part of what he called “the most aggressive mortgage sale in years.”
Kinch said there is widespread speculation the Bank of Canada will raise interest rates at the July setting.
A week after BMO announced its 2.45 per cent variable mortgage rate promo (prime minus 1 per cent), TD responded by matching the rate at a discount of prime minus 1.15 per cent.
Scotiabank is offering prime minus 1 per cent for new mortgage applications, and HSBC will be marketing an even more aggressive prime minus 1.06 per cent, to a 2.39 per cent mortgage rate, by the time you read this.
RBC is matching the prime minus 1 per cent rate, with a 2.45 per cent variable rate offer until June 4.
Spring mortgage competition is not new but it is fueled this year by a slump in mortgage demand, analysts note. In Greater Toronto, as an example, housing sales have fallen to the lowest level in nearly a decade. Nationally in the first quarter, investment in housing fell 1.9 per cent, the largest decline since the first quarter of 2009 as the pace of home sales slowed.
The Bank of Canada’s next scheduled interest rate decision is July 11 when it will also update its outlook for the economy and inflation in its monetary policy report.