Prospective homebuyers across the country received some good news on Tuesday, as MortgageBrokerNews.ca reported that many mortgage brokers are now offering rates below 3 per cent on five-year fixed-rate mortgages.
This news didn't sit well with Finance Minister Jim Flaherty, who immediately contacted the major banks to advise them not to wade into the heated battle over mortgage rates.
According to Kelvin Mangaroo, president of ratesupermarket.ca, the last competitive push to bring rates under the sub-3 per cent mark was back in March 2012. Back then it was a bank, BMO, leading the charge with its "no-frills" 2.99 per cent rate. Other financial institutions quickly followed suit in order to remain competitive.
This month, bond investors have also experienced a significant rate drop. On Monday, the rate for a five-year Government of Canada bond dropped 1.55 per cent. This drop had an instant impact in the marketplace considering consumer
mortgage rates are based on bond rates.
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