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Three of Cdn banks re-introduce mortgage rates under 3%

VANCOUVER (NEWS1130) – It’s good news, if you’re planning to get into the housing market: a handful of big banks have cut mortgage rates to below three per cent.

But the move has has raised eyebrows in Ottawa.

Joe Oliver, Canada’s new finance minister, says the government has taken steps in the past to reduce consumer debt and the government’s exposure to the housing market.

“I will continue to monitor the market closely,” he adds.

The Bank of Montreal is the latest to chop one of its rates; it’s taken its five-year fixed rate to 2.99 per cent.

TD and Scotiabank have recently taken their four-year fixed rates to below three per cent, as well.

This all comes one year after former Finance Minister Jim Flaherty cautioned against making rates that low. He spoke out last March after BMO took its five-year fixed rate to 2.99 per cent, saying he expected banks to engage in “prudent lending.”

He worried about practices that resulted in a mortgage crisis south of the border.

Peter Kinch with the Peter Kinch Mortgage team says it could be very expensive to get out of the lower rate, once you’re locked in.

“Structured on the back end is something the consumer has to really take a close look at. It’s kind of buyer beware, but having said that, be very clear that all the lenders are trying to jump into the spring market.”

He also says the mortgage could be very expensive to get out of once you lock in.

“You might have to sell your house to break the mortgage or the penalty could be a much higher penalty.”