Canadian banks are chopping their mortgage rates across the board by up to a third of a percentage point as the cost of borrowing in the bond market falls.
Royal Bank and BMO announced their cuts late Friday, while TD Canada Trust followed with its own rate cut announcement on Tuesday. Other banks are expected to follow.
The popular five-year closed mortgage gets the biggest cut.
At TD Canada Trust, a five-year closed mortgage drops three-tenths of a percentage point to 5.55 per cent. At the Royal, the five-year closed term falls three-tenths of a point to 5.49 per cent. At BMO, a five-year loan also falls to 5.49 per cent, but that represents a drop of .36 of a percentage point.
These are all posted rates. The big banks typically offer discounts of at least a full percentage point on most closed mortgages.
BMO and RBC say they're offering a special rate of 4.19 per cent on their five-year mortgages. A few smaller financial institutions — such as First Calgary Savings — are currently offering five-year loans for just under four per cent.
At the big banks, most other mortgage terms were trimmed by smaller amounts. A one-year closed mortgage falls a fifth of a percentage point to 3.70 per cent at BMO and RBC. A 10-year closed mortgage drops a fifth of a percentage point to 6.70 per cent at TD and to 6.75 per cent at the other two.
Analysts say low mortgage rates have helped to turn around the Canadian housing market in recent months. Real estate statistics for July show that the number of resales across the country surged more than 18 per cent from a year earlier to a record high. The average MLS sale price in July was up 7.6 per cent from July 2008.
The Bank of Canada is widely expected to keep its key overnight lending rate unchanged at its current record low of 0.25 per cent when it makes its next interest rate policy announcement on Thursday.
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