The race to offer lower mortgage rates just got more intense as credit unions decided to jump into the fray.

Barely a week after BMO triggered a price war by dropping the interest rate on a five-year fixed-rate mortgage to an unprecedented limited-time offer of 2.99%, followed by TD Bank and RBC with similar offers, FirstOntario Credit Union, one of Canada’s leading member-owned financial cooperatives, today announced a four-year fixed rate mortgage at 2.98% and a seven-year fixed-rate mortgage at 3.98%, effective immediately.

“As consumers, we all need to be on the constant lookout for ways to reduce housing costs and eliminate debt faster,” said Dave Schurman, executive vice president and chief operating officer, FirstOntario Credit Union. “We urge anyone looking for a better deal than their current bank is giving them to take advantage of these great rate offers.”

The special rate offers – available for new and renewed mortgages – come with standard FirstOntario features such as a 90-day rate guarantee on pre-approvals and accelerated payment options.

Earlier this month, FirstOntario Credit Union launched a public awareness campaign to educate consumers about the benefits of a community-based credit union over Canada’s big banks.

A new, national survey conducted by FirstOntario in November 2011 revealed that 40% of Canadians are unhappy with the high service fees their bank charges them.

The survey polled more than 2,500 Canadians on their banking practices, preferences, satisfaction levels, and asked whether they would be willing to leave their bank. Of those surveyed, 42% indicated they are either ‘unsatisfied completely’ or only ‘somewhat satisfied’ with their current bank.

Nearly 10% said they are reluctant to switch because it is the only bank they have ever had, or they feel that switching would be too much trouble.

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