Toronto-based Manulife Bank of Canada has withdrawn a promotional mortgage rate cut under pressure from the federal Finance Department.
The bank, owned by Manulife Financial Corp. (TSX:MFC), had cut its posted rate for five-year fixed mortgages to 2.89% from 3.09%.
That ran afoul of Finance Minister Jim Flaherty’s desire to prevent major lenders from offering extremely low mortgage rates that could stoke consumer debt and push up real estate prices.
Flaherty had publicly complained after Bank of Montreal (TSX:BMO) dropped its posted five-year mortgage rate two weeks ago to 2.99% from 3.09%.
He followed up a few days later by thanking the country’s big banks for not matching Bank of Montreal’s move.
Manulife is primarily a life insurance company, but is one of Canada’s largest non-bank financial groups, offering a variety of services including mortgages.
Manulife issued a statement Tuesday saying: “After consulting with the Department of Finance, Manulife Bank has withdrawn the promotional campaign and reverted to our previous posted rate.”