Skip to main content

The Globe and Mail

TD CEO backs Ottawa’s hands-off approach to mortgage rate cuts

CEO of TD Bank Ed Clark addresses shareholders at the company's annual general meeting in Calgary.

TODD KOROL/REUTERS

Toronto-Dominion Bank's chief executive officer has given his approval to Ottawa's reaction to recent mortgage rate cuts.

At the bank's annual general meeting Tuesday in Calgary, CEO Ed Clark was asked how he felt about federal Finance Minister Joe Oliver's response to Bank Montreal's decision to cut its five-year mortgage rate to 2.99 per cent.

Mr. Clark said he is "supportive" of the reaction, and added that governments should not be in the business of fixing prices. "I think that's treacherous territory," he said.

Story continues below advertisement

Rather than focus on rates themselves, Mr. Clark said he much prefers governments to focus on other measures to cool the market, such as shortening the maximum amortization period on a mortgage.

Broadly speaking, Mr. Clark added, "governments fixing prices hasn't been a success" in any market.

For the time being, Ottawa's new Finance Minister is taking a hands-off approach to the mortgage market and does not want to interfere in the rate-setting decisions of the banks.

"There's a market, and [BMO] made its decision," Mr. Oliver said the day after the bank slashed its rate to 2.99 per cent.

"The chief executive officer of the Bank of Montreal informed me about it. I listened to his explanation, his reasons. I reiterated what I just stated, which is the government is gradually reducing its involvement in the mortgage market," Mr. Oliver added.

Mr. Clark also noted that any market share gains from lowering mortgage rates are likely to be short-lived. Both TD and Bank of Nova Scotia are both marketing rates below 3 per cent – albeit it for four-year mortgages whereas BMO's is for five years – and Ontario's largest credit union recently slashed its own five-year rate to 2.95 per cent.

Because so many lenders are copying each other, it's hard for any of them to stand out.

Story continues below advertisement

Cutting rates "is a good thing for the consumer," Mr. Clark said. "It's not a sensible thing for the industry."

Report an error Licensing Options
About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.