BMO Bank of Montreal wants its mortgage customers to be mortgage-free in 10 years and it’s going to help them get there with a fully developed mortgage plan and six and ten-year fixed-term mortgages at rates below current five-year fixed-term rates.
BMO Bank of Montreal’s new 6-year fixed-term mortgage is currently available at 5.7 per cent. BMO’s 10-year fixed-term mortgage is 6.5 per cent. The bank’s five-year rate is 6.55 per cent.
“Fixed interest rates are continuing to move up slightly but they are still at or near historically low levels,” said Gail Kassie, Director, Mortgages and Home Financing Products, BMO Bank of Montreal. “These two mortgage offers allow customers to take advantage of the current rate environment and lock in these rates over a longer term.”
Kassie said that there is a general consensus building that Canadian interest rates have bottomed out. “Our economists expect we will probably see steady shorter-term rates and mildly rising longer-term rates through the end of this year. By the spring of 2004, however, even shorter-term rates will moderately rise, as the U.S. Fed and the Bank of Canada are expected to begin raising their policy rates,” she said.
Kassie said that BMO’s 6-year mortgage will attract customers that traditionally like the security of a fixed mortgage and typically choose a five-year term. “BMO Bank of Montreal’s 6-year mortgage will provide these customers with an additional year of security against rising interest rates,” she explained.
“BMO Bank of Montreal’s 10-year mortgage is a mortgage solution that is great for first-time homebuyers,” Kassie said. “They will get a predictable payment schedule over the long run, a rate that is currently below the 5-year fixed posted rate, and a fully-developed mortgage plan to help them become mortgage-free sooner.”
The plan, which BMO mortgage specialists will provide to anyone who takes out the 10-year mortgage, maps out a payment schedule that allows customers to increase their mortgage payments by 9.5 per cent yearly so that their mortgage is fully paid in 10 years. “We’ll even kick in a cash-back of half a per cent of the mortgage, which customers can apply as a first prepayment to get a head start,” said Kassie.
At BMO’s lower rate of 6.5 per cent, a $100,000 mortgage would be completely paid by the end of the 10-year period, saving more than $40,000 in interest payments. By comparison, the holder of a conventional five-year mortgage at today’s current rate of 6.55 per cent would still owe more than $67,000 at the end of 10 years (see FAST FACTS for detailed comparison).
Kassie said the housing boom in Canada is expected to continue through the fall and therefore there will be a continued demand for mortgages.
Under BMO Bank of Montreal’s 10-year mortgage plan, a customer can pay off his/her mortgage completely in 10 years and save more than $40,000 in interest payments on a mortgage of $100,000.
* Presumes mortgage will be renewed for another five-year term at the same rate
BMO Bank of Montreal is a member of BMO Financial Group, one of the largest financial services providers in North America. BMO Financial Group serves clients across Canada and in the United States through its Canadian retail arm, BMO Bank of Montreal; through its Chicago-based Harris Bank, a major U.S. mid-west financial services organization; and through BMO Nesbitt Burns, one of Canada’s leading full-service investment firms.