Manulife Financial Corp.’s Canadian bank withdrew a promotional mortgage rate, under pressure from Finance Minister Jim Flaherty who is encouraging consumers to reduce household debt.
“After consulting with the Department of Finance, Manulife Bank has withdrawn the promotional campaign and reverted to our previous posted rate,” the Toronto-based insurance company said in an e-mailed statement today.
Manulife Bank withdrew its rate of 2.89 percent for a five-year fixed mortgage, posted on March 15. Manulife had cut its rate from 3.09 percent.
“We don’t want a race to the bottom on mortgage rates by our financial institutions so I’m pleased at their response,” Flaherty told reporters in Ottawa. “I had one of my staff call and indicate my displeasure.”
Earlier this month, Flaherty told Bank of Montreal officials that he didn’t like the lender’s reduction in its five-year mortgage rate to 2.99 percent.
“I’m kind of shocked,” John Andrew, a real estate professor at Queen’s University in Kingston, Ontario, said of the government’s intervention. “It’s a very overt attempt to manipulate what I see as the competitive free market.”
Manulife also looks “weak” for giving in to the government pressure, he said. “Manulife looks like the kid who just had his lunch money stolen.”
Graeme Harris, a spokesman at Manulife, didn’t immediately return a call seeking comment. Paul Deegan, a Bank of Montreal spokesman, declined to comment.