Canada column for Sunday, March 31/13
THE CANADIAN REPORT
(c) By Jim Fox
Some people call it meddling but Finance Minister Jim Flaherty said that pressuring banks not to engage in a mortgage-rate war is in the best interests of Canadians.
Flaherty personally called Bank of Montreal (BMO) executives to complain when its five-year mortgage rate was reduced to 2.99 per cent this month.
Members of his staff then contacted Manulife Financial the next day to express displeasure after dropping its five-year rate to 2.98 percent.
There is a concern with current historically low rates “whether people can afford their mortgages when interest rates go up,” Flaherty said.
Manulife quickly complied and put its rate back up to 3.09 percent while BMO’s rate was restored to 3.09 percent last Friday.
Small Business Minister Maxime Bernier opposed Flaherty’s action, saying he wouldn’t dictate the rates the private sector should offer.
“It’s supply and demand that decides the prices,” he said.
“We want to ensure that mortgages remain affordable and stable and that the market stays stable and affordable in the long run for Canadian families," Prime Minister Stephen Harper said.