Bank of Montreal has lowered its five-year fixed mortgage rate to 2.79 per cent from 2.99 per cent, effective immediately.

The rate cut comes ahead of the key spring real estate season. The latest numbers from the Canadian Real Estate Association show that Canada’s housing market continues to crank out gains, with the average price up more than six per cent to over $430,000 last month.

Those gains are coming at least in part on the back of lower rates, which have been compelling Canadians to buy more houses at lower than usual interest rates.

BMO is the first of Canada’s big banks to significantly alter its benchmark interest rate since the Bank of Canada surprised markets with an unexpected rate cut in January.

More than two-thirds of mortgage-holders opt for a fixed rate term, the Canadian Association of Mortgage Professionals says, and within that, five-year terms have been the dominant standard for some time.

source: CBC