BMO Bank of Montreal announced today that it would be increasing the rate guarantee period for mortgages from 90 days to 130 days – the longest among all Canada’s major banks – amidst expectations for continued Bank of Canada rate hikes in 2018.
The change will benefit home buyers navigating an increasingly complicated market, and provide them additional time to finalize their mortgage plans with their guaranteed pre-approved rate.
“This change in our mortgage rate guarantee period could not be timelier for our customers,” said Martin Nel, Head, Personal and Small Business Banking, BMO Financial Group. “As always, we are listening and responding to their needs to help make their financial dreams a reality, while removing friction and uncertainty from the home buying process.”
Forecasting for the housing market also suggests why those looking to enter the market, or get into a new home, could benefit from the extended timeline.
“In the coming year, home buyers face tougher mortgage rules, a rising interest rate environment and uncertain housing markets in high-priced regions,” said Sal Guatieri, Senior Economist, BMO Bank of Montreal. “After pulling the rate trigger on January 17, we expect the Bank of Canada to raise policy rates two more times this year by a total of 50 basis points to address potential inflation risks stemming from an economy pushing against capacity limits.”
Mr. Guatieri noted that a tighter monetary policy, together with interest rate pressures arising from a stronger U.S. economy, will likely lift longer-term interest rates in Canada by one-half percentage point this year. An extended rate guarantee would give buyers more time to assess the impact of new mortgage rules on house prices in high-priced Toronto and Vancouver before making a decision.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8thlargest bank, by assets, in North America. With total assets of $728 billion as of January 31, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group