This week BMO announced a cut to its mortgage lending rates, from 3.09% to 2.99% on 5-year fixed-rate mortgages. In the middle of last year, most financial institutions increased their rates from 2.99% to 3.09% after the Federal Government changed lending rules to make it a littler harder for consumers to over-extend themselves.
So what’s this doing to the housing market? It’s continuing to fuel a large pool of buyers. Combine this with a limited supply of good houses, and you have a hot market with bidding wars a dozen people deep. Condos also seem to have rallied a little from last fall, but sales are still well below where were were at the height of last spring.
BMO’s new rate cut prompted Finance Minister Jim Flaherty to again caution consumers not to borrow more than they can carry and to consider their borrowing practices as lending rates will–eventually–go up. Despite these lower rates, I’ve found that most buyers are still cautious about how much they borrow and are self regulating themselves to avoid becoming “house poor.”