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Canada’s top banks cut mortgage rates

By Robert Hof

Reproduced from The Vancouver Sun.

Canada’s Big Five banks have rolled out rock-bottom mortgages at 2.99 per cent for the second time this year. Toronto-Dominion Bank, Royal Bank of Canada and Canadian Imperial Bank of Commerce and Bank of Nova Scotia followed Bank of Montreal’s lead this week in offering discount rates on a limited-time basis.

Bank of Montreal began the latest round of offers on Wednesday, unveiling a 2.99 per cent five-year mortgage, one of the lowest rates ever for such a product. BMO first offered its 2.99 per cent five-year home loan for two weeks in January. Other commercial banks followed suit that time as well.

The mortgage rate cuts are the latest round in an intensifying battle for market share among the banks. Consumer borrowing is a key driver of bank profits but in the face of a slowing economy, demand for home loans has been slowing, compelling lenders to cut rates and surrender profit margin in the hopes of driving additional business.

But the rate wars come amid rising concern over record consumer debt levels. Critics argue that the banks should be encouraging households to reduce debt instead of taking on by buying houses.

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