Two major Canadian banks cut mortgage rates Wednesday to stimulate the constricted housing market.

The Royal Bank of Canada (RBC) and the Bank of Montreal (BoM) both chopped borrowing costs for people seeking to buy a home.

RBC cut its mortgage rates by one-quarter of a percentage point for most of its loans with terms ranging from six months to 25 years.

But for the one-year closed and four-year closed mortgages, the rates were slashed by three-quarters of a percentage point. The one-year vehicle now costs 5.60 percent while the four-year mortgage rate is 6.29 percent.

BoM cut its three-year variable-rate mortgage by 50 basis points, to 5.0 percent.

In its biggest move, BoM knocked the rate on its one-year fixed closed mortgage by 1.05 percent to 5.60 percent. The only three-year mortgage making the RBC list was closed, with an interest rate of 6.45 percent.

Worldwide, interest rates have been falling as central banks cut prime lending charges and pumped trillions into the global financial system in an effort to get lenders lending and borrowers borrowing once again.

In Canada, a one-year conventional mortgage had an average interest rate over the past 20 months of 6.94 percent. That compares with a current rate for the same borrowing vehicle of 6.35 percent, according to the Bank of Canada. (Xinhua)