BMO has come out swinging with its latest spring promo.
The country’s fourth largest bank is advertising a red-hot prime – 1.00% variable. At 2.45% currently, it’s now the best variable rate for refis in the country.
This special is also the largest widely advertised big-bank variable discount we’ve ever seen.
As of press time, we’re still getting details and will post them here when we do. For now, here’s what we know:
- It applies to purchases, transfers and refinances
- It’s not available to current BMO borrowers coming up for renewal (can you hear that hissing sound from BMO’s existing customers?)
- The maximum amortization is 25 years
- It is optionally available with BMO’s ReadiLine readvanceable mortgage (line of credit)
- It’s a standard charge mortgage for cheap easy switching of lenders at maturity, unless you get it in a BMO ReadiLine (which is registered as a collateral charge)
- BMO will guarantee this discount up to 130 days if you apply before the promo is over
- The mortgage rate is compounded monthly — which, on a typical $200,000 mortgage, costs you about $118 more over five years than semi-annual compounding
- BMO says the promo will expire at the “end of May”
- BMO’s variable rate mortgage is not portable, which is a deal killer for some.
Finally a Big 6 Bank Shows Signs of Life
BMO’s move is a counter-attack on HSBC, which has dominated the uninsured variable-rate market for two months with its prime – 0.96% (2.49%) special. Prior to this, no Canadian bank has openly gone head to head with the multinational giant.
The move also marks a long and steady improvement in floating rates in general. Competitive variable rates were as poor as prime – 0.20% back in early 2012. Back then, some speculated that we may never see prime – 1.00% again. But variable discounts have been improving ever since.