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Mortgage rates slashed

The Bank of Montreal (TSX:BMO) is lowering its five-year fixed-rate mortgage to back to levels that caused former Finance Minister Jim Flaherty to express concerns last year.

The bank says it will offer a five-year rate of 2.99 per cent, down from 3.49 per cent.

BMO is the first big bank to lower the key rate beneath three per cent, a level that caused Flaherty to publicly address BMO in March 2013, saying that he disapproved of the rate and discouraged other big banks from following its lead.

At the time he said he believed in "responsible lending," and that he was concerned such low rates would work against his attempts to slow the momentum in the housing market.

Flaherty left his role as finance minister last week after a surprise resignation earlier in the month. He was replaced by Joe Oliver.

"This rate change is driven solely by the fact that bond yields have fallen and we are in what has traditionally been the busiest season for buying a home," said BMO spokesman Paul Deegan in an emailed statement.

Other Canadian banks have also recently cut their rates — TD Bank (TSX:TD) reduced its four-year fixed-rate mortgage to 2.97 per cent earlier this month, while Scotiabank (TSX:BNS) lowered its rates across the board while issuing a four-year special rate at 2.94 per cent.

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