2 reasons mortgage rates are artificially inflated

Finance Minister Flaherty’s attempts to cool the hot housing market may be for naught — especially now that most banks are offering mortgage rates under 3%, says the Globe and Mail. So why does Ottawa continue to keep rates artificially inflated? 1) Rate obscurity Discouraging banks from publicly advertising rates that are under 3% keeps […]

March 18, 2013 | Last updated on March 18, 2013

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Finance Minister Flaherty’s attempts to cool the hot housing market may be for naught — especially now that most banks are offering mortgage rates under 3%, says the Globe and Mail.

So why does Ottawa continue to keep rates artificially inflated?

1) Rate obscurity

Discouraging banks from publicly advertising rates that are under 3% keeps a small fraction of consumers in the dark about the real rates banks can offer.

2) An edge for bank competitors It’s been easier for brokers and other lending institutions to compete with banks since Flaherty has encourages banks to keep five-year rates above 3%.

Read two more reasons.

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