TORONTO, ONTARIO, Jun 11 (MARKET WIRE) —
BMO Bank of Montreal (TSX: BMO)(NYSE: BMO) and BMO Financial Group -

The much anticipated announcement last week from the Bank of Canada
raising its overnight rate has Canadian homeowners and those shopping for
a home now wondering what they should be doing as interest rates begin to
climb.

“While short-term interest rates are not expected to rise rapidly,
they are expected to increase about three percentage points by the end of
next year,” said Sal Guatieri, Senior Economist, BMO Capital
Markets. “The era of historically low mortgage rates is coming to an
end.”

So, what does this mean for home owners and prospective buyers? Is it too
late to protect yourself? “The Bank of Canada’s recent rate
announcement might leave some homebuyers believing they’re too late to
take advantage of historically low mortgage rates,” said Jane Yuen,
Senior Manager of Mortgages, BMO Bank of Montreal. “We continue to
offer our low-rate 5 year fixed mortgage with maximum 25 year
amortization, now at 4.25 per cent. We encourage customers to lock-in now
as pressure builds for rates to rise.”

BMO advises Canadian home owners and prospective buyers to stress test
their financial budget using a mortgage payment based on a higher
interest rate. Here are the top tips to consider to ‘stress test’ your
budget today so you don’t become ‘stressed out’ later:

Take a shorter amortization:

– The shorter the life of the mortgage, the less you pay in interest.
– Cutting your amortization period by five years from 30 to 25 years could
save you over $53,000 in interest. You will be mortgage-free faster and
your monthly payments will only increase by $84(I).

Make a larger down payment:

– Providing a bigger down payment is an excellent way to help you pay less
interest over the life of your mortgage.

Make sure you can afford what you signed up for:

– Stress test your financial budget using a mortgage payment based on a
higher interest rate.
– Total housing costs (mortgage payments, property taxes, heating costs,
etc.) should not consume more than one-third of household income.

Make pre-payments when you can:

– Pay weekly or bi-weekly instead of monthly.

Take advantage of prepayment privileges:

– Increase your mortgage payment (principal and interest) by a percentage
(II) over the current payment. At BMO this option can be exercised once
each calendar year, at any time, without charge.
– Pre-pay a percentage (II) of the original mortgage principal each
calendar year. At BMO this option can be exercised in minimum amounts of
$100 without charge, some conditions apply.

Always make sure you save for a rainy day:

– If you are up to your maximum in debt, you may not be well prepared for
the leaky roof along the way.

Think carefully about fixed vs. variable:

– While variable rates mortgages have been a winning strategy over the
long term, fixed rate mortgages (currently at historic lows) come with
the peace of mind of being insulated against rate increases.

(I) Example is based on $200,000 mortgage, at 7% APR amortized for 25
years.

(II) May vary; refer to product information for further details

Contacts:
For media inquiries or to arrange for an interview
please contact:
Martha McInnis, Toronto
416.867.3996
Martha.mcinnis@bmo.com
www.bmo.com/lowratemortgage

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