The 2.99% 5-year fixed mortgage is back
The five-year fixed mortgage at an advertised rate below three per cent has returned to Canada for the first time since last year.
Meridian Credit Union, the largest credit union in Ontario, announced this week it had lowered its benchmark five-year fixed-rate mortgage to 2.99 per cent.
According to market surveys carried out by RateSpy.com and Cannex.com, that is the lowest advertised rate for the popular mortgage term in Canada.
Meridian's mortgage special is available just in Ontario, but it appears to have few other restrictions.
Earlier this month, MortgageBrokerNews.ca reported that two mortgage brokers — Verico Butler and Advent Mortgage Services — were also offering 2.99 per cent five-year fixed mortgages.
Brokers are often able to get mortgage rates for their clients that are lower than what big lenders offer. But sometimes, super-cheap mortgages have severe restrictions on such things as rate holds and prepayment privileges.
Bond yields falling
Fixed mortgage rates have been creeping down in the last month at most lenders as Canadian bond yields have been falling. Fixed mortgage rates tend to track bond yields.
The yield on Canada's five-year government bonds has fallen 33 basis points so far this year to 1.62 per cent.
Last year, some big banks attracted the ire of Finance Minister Jim Flaherty for aggressively pushing 2.99 per cent five-year mortgages. He was worried that cheap financing would stoke a housing market that some economists were calling overheated and overvalued.
Since credit unions are provincially regulated, Flaherty has no formal power to pressure Meridian over its current promotion.