Brokers are used to having the best rates available in the market but for now it looks like they’re being beat out by one local credit union; though it appears it may have sparked another “rate war,” with one leading broker offering a competitively priced product.
Meridian Credit Union is offering a 2.99 per cent five-year fixed rate at the branch level in Ontario only. The rate includes a 45 day rate hold and a 20 per cent lump sum option for both monthly and yearly payments.
“It’s a 45 day close, so that’s about the only (limitation and) all the other conditions are normal; the 20 per cent increased principle and anniversary payments,” Bill Whyte, chief of member services at Meridian Credit Union told MortgageBrokerNews.ca. “The only thing we shortened is the 90 days to 45 days. We haven’t limited any of the other conditions.”
And although the rate is only being offered to members of the branch, Meridan is still focusing on offering brokers more "niche" products.
"We do have … a pretty competitive rate available for brokers," Whyte said. "Where we focus for brokers is on niche mortgage products – that’s business-for-self mortgages, construction mortgages."
In early February Industrial Alliance offered a five-year fixed rate at 2.99 per cent, though the promotion only lasted a week. The offering drew the scorn of many brokers, who felt the product’s lack of bridge financing could be a detriment to clients.
“I have a problem with offering a product that isn’t what I consider a full service mortgage in the sense that it is missing things, for example bridge financing,” Dan Faubert of Ottawa-Carleton Mortgage told MortgageBrokerNews.ca at the time. “Industrial Alliance doesn’t have that feature in any of their mortgages.”
Meridian is the only lender offering a sub-three per cent five-year fixed product; though Whyte believes its rate may spark some competition.
“We wanted to get out there quickly,” Whyte said. “It may start some interest, I’m sure our competitors and like-minded organizations are looking at it and taking into account as they consider what they should do.”
And at press time it looks like that competition has already begun, with Verico
Butler Mortgage offering a 3.04 per cent five-year fixed rate, according to RateSupermarket.ca