Newspaper article The Canadian Press

Scotiabank Lowers Its Fixed Five-Year Mortgage Rate to 2.97 per Cent

Newspaper article The Canadian Press

Scotiabank Lowers Its Fixed Five-Year Mortgage Rate to 2.97 per Cent

Article excerpt

Scotiabank lowers fixed 5-year rate to 2.97%

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TORONTO - Scotiabank (TSX:BNS) is the latest lender to create waves in the mortgage market after lowering its special fixed five-year rate to 2.97 per cent, the lowest fixed rate among the big banks.

The rate is effective until June 7, and comes amid growing competition for mortgages that have pushed rates down in recent months.

It's also below the 2.99 per cent level that drew sharp criticism from Ottawa in the past over fears that such rates could overheat the housing market and encourage buyers to borrow too much.

However, Scotiabank says the rate is on par with others in the market.

David Stafford, Scotiabank's managing director of real estate secured lending, said the trick is to use the low rates to your advantage because they won't last forever.

"Our best advice to people renewing from a higher-rate mortgage is don't change your payment," he said.

"If you have a four per cent mortgage and you're up for renewal and you're renewing into a three per cent mortgage and your payment isn't killing you, keep the payment because the interest cost to your mortgage will drop but the additional payment will all go to principal."

The special five-year rate doesn't come with the strict restrictions that usually accompany such low rates, he added, so that borrowers can have the flexibility they'll need if their circumstances change.

John Andrew, a real estate expert with Queen's University, said it was likely that other banks would follow Scotiabank's lead to keep in pace in a competitive market -- especially given a lag in sales in the all-important spring market which was delayed by bad winter weather.

"There's no question that the mortgage lenders are very concerned about this slow spring and are obviously trying to catalyze the market and it's obviously even more competitive right now than it normally would be," Andrew said.

"We're looking at mortgage rates very, very, close to this level being predominant right into the fall, and then I think we're going to see bond yields begin to creep up again and we'll start to see some rates rising. …

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