Look out, brokers. One mono-line has now introduced 2.94 per cent on a five-year fixed with possibly just enough standard terms and conditions to set off another rate war.
Xceed is among the first channel lenders to ramp up competiton – or rather, ramp down rates – on the heels of mortgage rule changes meant to cool the housing market.
Xceed is billing the Super Prime as a fully-featured five-year mortgage, specifically for customers with “exemplary credit history” and offered at 25 bps below its prime rate.
Those features include 20/20 prepayment privileges and BFS eligibility. They also point in the direction banks and mono-lines are expected to move in light of the 25-year amortization cap and an 80 per cent LTV on refinances.
The collective increase in the quality of applicants, and the resulting volume challenges, means broker channel lenders will be forced to better compete on rate, argue industry analysts.
Xceed’s offer, limited to clients with Beacon scores at or above 740, may be the opening salvo in a coming skirmish between lenders of all stripes.
Still, those limits, and the relatively small size of the lender’s market share, suggests a much larger player needs to follow suit, said one broker Monday, in order for others to slash rates.
Any move in that direction would see place pressure on the banks and all mono-lines to lower their fixed rates, with bond yields suggesting they now have some room to move.
Still, it’s by no means certain that brokers will win in a fiercely competitive rate environment like this spring’s 2.99 per cent from BMO.
While the big bank offered that rate on a five-year fixed, other lenders were faulted for refusing to counter with the same rate on the same term – something that may have cost them and brokers, alike.