Fixed rates hit the basement
Garry Marr Jan 12, 2012 – 2:58 PM ET
 

Canadians thinking about locking in their mortgage just got a compelling reason to do so — the lowest interest rate in history.

The Bank of Montreal cut the rate on its closed five-year fixed mortgage to 2.99%, a half a percentage point drop that is expected to set up a wave of competition among the banks as they fight for market share in a shrinking real estate market.

“That’s the lowest anybody has ever seen from one of the major lenders ever,” said Rob McLister, editor of Canadian Mortgage Trends, adding mortgage specialists at Royal Bank have told him their financial institution has vowed to match any cuts.

The BMO offer does come with some catches, namely customers can only pay 10% of the mortgage principal in a lump sum payment per year as compared with the usual 20%. Monthly payments can only be increased by 10% instead of the usual 20%......Read More of this Article