BMO lowers five-year fixed mortgage rate

People pass by the Bank of Montreal in Toronto on Tuesday, Aug. 28, 2012. (Michelle Siu / THE CANADIAN PRESS)

TORONTO - The Bank of Montreal is lowering its rate for a five year fixed mortgage amid concerns about a cooling housing market.

Effective immediately the rate will drop to 2.99 per cent from the current 3.09 per cent.

The other big banks could follow suit.

Last month, Canada Mortgage and Housing Corp. said new housing construction is expected to be lower this year due to moderate economic and employment growth in the second half of 2012.

The Teranet-National Bank index of Canadian housing prices in January continued to show the effects of a cooling trend that has hovered over the real estate market for more than a year.

The index was at 153 last month, up just 2.7 per cent from January 2012 -- the lowest 12-month growth rate since November 2009.