Scotiabank matches mortgage rate cuts

Canada's big banks all cut mortgage rates, echoing similar moves made earlier this year.
The Bank of Montreal cut its five-year mortgage rates to 2.99 per cent, prompting Canada's other major banks to offer similar rates. (CBC)

The Bank of Nova Scotia has followed suit with the rest of the big banks by cutting mortgage rates.

Scotiabank announced Friday it will also offer a four-year fixed rate mortgage at 2.99 per cent.

It follows similar moves made Thursday by TD Canada Trust, CIBC, and Royal Bank.

The cuts all came after the Bank of Montreal announced that it would offer a five-year fixed rate mortgage rate at 2.99 per cent.

BMO also cut the rate of its 10-year mortgage to 3.99 per cent, the lowest any of Canada's big banks has ever offered on a 10-year mortgage.

While the banks are offering the same interest rate, the longer amortization period offered by BMO could be significant for some home buyers.

This latest rate is available until March 28 and applies to mortgages with a 25-year amortization period.

This is the second time this year that Canada's big banks have matched mortgage rate cuts. BMO first offered the 2.99 per cent rate on its five-year mortgages in January before pulling the offer after a few weeks.

Canada's other major banks also cut their rates in January for a short time, but only offered the 2.99 per cent rate on four-year amoritizaiton periods.

Analysts have said fierce competition in the mortgage lending market has driven rates to record lows. However, this has eroded profit margins, forcing banks to look elsewhere for profits.

Some analysts speculate the rates were pulled quickly because of fears that profit margins were eroding too quickly.

CIBC recently announced it was looking to sell its mortgage broker business to drive customers into branches and thereby increase profit margins.

While lower rates have been a benefit to home buyers, they have raised concerns among some Canadian policy makers. Bank of Canada governor Mark Carney has spoken about Canadians' rising appetite for debt, while Finance Minister Jim Flaherty has repeatedly warned Canadians to get their financial houses in order.

The Bank of Canada kept its key interest rate unchanged Thursday, further adding to concerns of rising household debts.