BMO lowers mortgage rate

Canadian home buyers are getting another break as the Bank of Montreal slashes morgatage rates.

BMO announced last night it is dropping the five-year fixed rate mortgage from 3.5 per cent to 2.99 per cent. The move comes one week after Jim Flaherty left his post as the Minister of Finance.

Concerned about Canadian debt levels and ballooning house prices, Flaherty had been pressuring Canada’s financial institutions to keep mortgage rates higher.

Joe Oliver, Flaherty’s replacement, is being tested quickly by the banks.

Mortgage rates are hovering near historic lows, allowing home buyers to take on much more debt than they would traditionally be able to afford. With so many Canadians binging on cheap debt, the fallout for both the housing market and the economy could be ugly.

But for the moment, it seems Canadian borrowers and banks are set to continue driving up debt levels and record home prices.

Photo: Aaron Lynett / National Post

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