Mortgage War Catalyzes Housing Surge
Fierce competition among banks and home buyers is driving mortgage rates down and home prices up, signalling the start of a spring housing market that many observers expect will be particularly heated this year.
BMO unveiled a 2.79% promotion for its five-year, fixed-rate mortgage, a special that comes with prepayment restrictions. TD Bank quickly rushed to match the offering. Canadian Imperial Bank of Commerce began offering a five-year fixed mortgage earlier in March with a rate that starts at 1.99% for the first 9 months before rising to an average of 2.79%. It resets to [2.92] after 9 months.
Several mortgage brokers, however, called the posted rate specials a gimmick. Most major banks have already been publicly offering rates to brokers as low as 2.74% for standard five-year mortgages for the past several weeks. Several banks are offering rates as low as 2.69% on larger mortgages, with some brokers offering to sacrifice part of their commission to push rates as low as 2.44%.
The renewed rate war among the major banks underscores the intense competition coming just as the spring housing market is set to bloom.
In the Toronto area home prices were up nearly 11% in the first two weeks of March compared to the same time last year.
(Edited from the Globe and Mail)