BMO and TD Bank Offer Lowest 5-Year Fixed Mortgage Rate at 2.79%

After the coldest winter in years, competition among mortgage lenders appears to be heating up. With the spring housing market right around the corner, two of the so-called big banks have gone ahead and slashed their mortgage rates. Bank Of Montreal (BMO) fired the first shot by lowering its five-year fixed mortgage rate to a paltry 2.79 percent from 2.99 percent. Not to be outdone, TD Canada Trust soon followed suit by lowering its five-year fixed mortgage rate to 2.79 percent.

While low mortgage rates shouldn’t come as any surprise with the low interest rate environment we’re currently in, this recent cut in mortgage rates is a big deal. In fact, it’s the lowest posted five-year mortgage rate by the big banks in history. The big banks, who are notoriously stingy when it comes to their posted rates, are finally bringing their a-game to the table.

While  BMO and TD have finally lowered their mortgage rates, the other big banks still have sky-high mortgage rates. For example, at the time of writing, CIBC has a mortgage rate of 4.79 percent on its five-year fixed offering, while ScotiaBank has a posted rate of 4.49 percent. With secondary lenders like First National Financial offering posted rates below 3 percent for months and years, it’s nice to see the big banks finally wake up and lower their mortgage rates. 

The timing of the big banks lowering their mortgage rates isn’t a coincidence. Their looking to win market share in what’s expected to be a red-hot spring housing market in major cities like Toronto and Vancouver. Just last week we  found out  the average price of a Toronto detached home passed the $1 million milestone in February.

Why the Posted Rate Matters

You may be wondering why the posted rate matters. Similar to the sticker price on a new car, very few homebuyers take the posted rate. Buyers are a lot savvier these days. Websites like makes it easier than ever to shop for the best mortgage product from the comfort of your home.

The posted rate matters for mortgage penalties. Although most buyers don’t plan to break their mortgage when they sign up, the sad reality is some of us will. Common reasons for breaking your mortgage include divorce, unemployment and job relocation. Unless you enjoy paying your bank thousands of dollars in mortgage penalties, it’s important to keep an eye on the posted rate.


If you have a variable rate mortgage, the mortgage penalty is pretty straightforward: three months’ interest. However, if you have a fixed rate mortgage, that’s where it gets tricky. You’ll pay the greater of three months’ interest or the Interest Rate Differential (IRD). The IRD is a fancy formula the banks use to calculate your mortgage penalty.


A lot of the big banks will compare their inflated posted rate against the discounted rate you’re currently paying. This can result in a mortgage penalty in the thousands. Even if you’re able to negotiate CIBC down from 4.79 percent, it’s important to keep in mind that higher posted rates can come back to haunt you later on.