Lenders Lower Mortgage Rates
26 November, 2008

ALLAN ROBINSON

Globe and Mail Update

November 26, 2008 at 4:42 PM EST

Several Canadian financial institutions lowered their residential mortgage rates Wednesday across a broad range of maturities to take effect beginning this week.

The reductions on one- to five-year fixed-rate mortgages ranged from one-quarter of a percentage point to a full percentage point and varied with financial institution.

The companies lowering rates included Royal Bank of Canada, Bank of Montreal and Desjardins Securities.

The lower rates could reflect the decision by the federal government to buy $25-billion in mortgages from the domestic banks and consideration is being given to increase that amount, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc.

More intense competition among mortgage lenders is probably a second factor, he said.

“One thing we have learned in the past year-and-half is not to celebrate too early that the credit squeeze is coming to an end, but lower mortgage rates are an encouraging sign.” Mr. Porter said.

Royal Bank also introduced three new special mortgage rate offers allowing customers to select between short- and long-term options. The special offers are for one-year and four-year fixed closed mortgages. A five-year variable closed mortgage is for homeowners “who want exposure to potentially favourable rate fluctuations, but with the opportunity to convert to a fixed-rate,” the bank said.