"I spoke with them about that this week and expressed my concern," Flaherty said of the Bank of Montreal (TSX:BMO).
"It is an objective reduction of course, but it is also symbolic and we remain concerned, I remain concerned, with the housing market in Canada."
Speaking after meeting with private sector economists as part of preparations for the spring budget, Flaherty noted the housing market has moderated, which he said was a good thing.
"As you know we've tightened up the mortgage insurance rules four times over the recent years. So I thank those Canadian financial institutions that have not chosen to reduce their rates further," the minister said.
The Bank of Montreal dropped its posted five-year fixed mortgage rate by 0.10 points to 2.99 per cent this week ahead of the busy spring real estate market.
However the other major Canadian banks did not follow suit, though borrowers may have been able to negotiate a 2.99 rate or lower even with the posted rate among major Canadian banks at 3.09 per cent.
Flaherty and Bank of Canada governor Mark Carney have repeatedly raised warnings about the perils of borrowers taking on too much debt.