Soskin, Soskin and Potasky LLP: Are mortgage rates really falling?

Friends,

There has been plenty of media coverage lately about falling interest rates. Bank of Montreal announced a rate reduction for its five year fixed mortgage to 2.99%. But is this something new? Is it a good deal? Our resident mortgage expert Gianina Kumar explains:

"Turn on the TV or open the newspaper and its there - BMO 2.99% for 5 year fixed. Sounds great right... but is it really? It showed up first Jan 2012 and has reared its head again March 2013.Fact is that there are other banks out there offering lower rates without any of restrictions and limitations of BMOs no-frills mortgage. This rate is nothing special and these type of no-frills mortgage offers have been around for years. In our current low rate environment, your client doesn't have to sacrifice flexibility on their mortgage terms for a great rate. In particular BMO's restrictions include:

Reduced prepayment privilege to annual lump sum of 10%
Max amortization period of 25 years
You can only increase your payments by 10%
You cannot payout this mortgage unless you are selling the property
90 day instead of 120 day rate hold
You can only refinance this mortgage with BMO (and no other bank) - this restricts your ability to negotiate the rate if you are increasing the mortgage, leaving you at BMO's mercy

There are better rates out there for no-frills mortgages, some even as low as 2.79%.. however, I would never recommend these either as they come with massive penalty consequences if paid out early.

The fantastic news is that getting 2.99% with NO RESTRICTIONS is being offered by nearly every Lender right now. There are a handful of lenders even offering 2.89%

with all the bells and whistles.