BMO returning controversial mortgage rate to previous level

A sold sign hangs outside an existing home that was for sale on Monday, April 27, 2009. (AP / Amy Sancetta)

TORONTO - Bank of Montreal will end a controversial low mortgage rate at the end of this week, when the limited-time offer runs out.

The bank (TSX:BMO) says the posted rate for a fixed five-year mortgage will return to 3.09 per cent, where it was before BMO lowered it to 2.99 per cent.

Finance Minister Jim Flaherty had called Bank of Montreal to express his disapproval of its decision to offer the special low rate starting on March 4.

The minister also praised other banks when they didn't follow Bank of Montreal's lead and had one of his officials make a call when Manulife later did announce a cut.

Manulife decided a day later to reverse its cut, but BMO kept its offer in place.

The official date for the BMO change is Friday, but Canadian banks will be closed that day for the Good Friday holiday.