With bond yields expected to rise, economists believe that lower-rate mortgages won’t be around for very long, reports The Globe and Mail.
Recently, the Bank of Montreal dropped the rate of its five-year fixed-rate mortgage to 2.99 per cent. A similar move carried out by BMO last year incurred the wrath of then-finance minister Jim Flaherty. Additionally, it refuelled concerns over a potential housing bubble.
But one key factor is different this time – newly-appointed finance minister Joe Oliver seems to be taking a hands-off approach. Unlike his predecessor, he plans not to intervene in the mortgage market.
Last year’s rate reduction gambit did not last long, however, and the same thing is expected to happen this time around, according to one BMO economist.
“Canadian mortgage rates are once again on the decline, reflecting the rally in bond markets this year,” Sal Guatieri, an economist with BMO Nesbitt Burns, said in an interview.
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