A new 2.99% comes to town

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A top online-lead-generation brokerage is now hawking its own offer of 2.99 on a five-year fixed – becoming what it bills as “the first Canadian mortgage broker to break the 3 per cent threshold."

"Once again, we are applying our customer-first approach,” says True North Mortgage CEO Dan Eisner, in a press release last week, announcing the rate offer. “We want our customers to enjoy the lowest rates possible.  We have built our business on that model and today we are offering an all-time low rate of 2.99 per cent on a five-year fixed mortgage."

Unlike the BMO no-friller, which likely gave rise to it, the True North mortgage is “full featured mortgage with solid prepayment privileges,” although, according to the release, the offer is restricted to clients in Alberta and British Colombia.  

“We expect that first time buyers and those perhaps looking to lock in at a low rate will come to True North, not just because we have the lowest rates, but because we put our customers first," says Eisner, mum on his funding source and exact details around prepayment privileges.

Still, the deal comes as even other brokerages using lead-generation websites restrict themselves to five-year-fixed rates closer to 3.09 – 3.29 per cent.

Most of those mortgage brokerages rely on high-volumes to compensate for thinner margins in addition to paying aggregator websites for the leads they generate.

Still, more and more brokerages are turning to that formula to drive business as some real estate markets across the country cool.

The practice is not without some controversy, however, with many industry veterans concerned use of those websites reduces the value proposition of mortgage brokers to rate.


  • Rob on 2012-06-19 2:50:00 AM

    Buying the rate down at a national lender is available to all brokers. So is this really where the industry wants to go? A rate war against each other to see who is willing to reduce their commission the most.

  • Dustan Woodhouse on 2012-06-19 2:55:27 AM

    I neither support the practice nor criticise the action taken.

    My comment is simply that this is not big news, rather just a simple rate buydown from the 3.09 that lenders are currently offering. Not a sustainable model for a 20 deal per year or less broker, but for one with Dan's business model and Volume it works. He is taking advantage of a situation (being a Capitalist in a Capitalist society this makes sense) that is unlikely to change any time soon.

    It is what it is.

  • Jeremy on 2012-06-19 2:55:35 AM

    There is no story here. Any one of us can reduce our commission to offer 2.99%. Why prostitute ourselves out?

  • Bill Jones on 2012-06-19 3:14:34 AM

    If True North truly wants the "client to enjoy the lowest rate possible" why don't they buy it down even further? There's enough finders fee and VB to go to 2.75%. I don't like the arrogance, but I they can do whatever they like and become the Walmart of the industry if they so chose. I know that I won't lose a deal to them (I maybe just won't make as much).

  • pete erskine on 2012-06-19 3:32:25 AM

    Makes sense. This is about the only reason a customer would want to deal with True North over a full service broker or banker. Its not healthy for the industry at all. In terms of "Walmart of the the industry"... I think if it ever came to that then Walmart would do it themselves and cut this pion out.. And well prior to that BMO or any other bank would do it, and cut us all out. This is an irresponsible advertisement. He is holding himself out as a lenders (osfi) or baiting and switching (BBB)

  • Its A Business Model Stupid on 2012-06-19 5:03:02 AM

    Those negative criticisms have completely missed the point of the true north model. Its not about how much commission one makes on a deal. Is about capacity and through put of your production line able to produce a good or service at a price point where you can make a profit. Drive enough volume due to the strength of your brand and you have a business with a legacy. Individual brokers on the other hand don't have a legacy and are thinking and working like commission sales people. For them its about how much I can make on a deal if the customer does not know or force them to buydown the rate, great more money in their pocket. So then is that being honest to your customers or business conviction. Brokers can't do what true north is doing because they don't have an efficient low cost production line to crank out the volume needed without drowning in paperwork. All the high fees paid to brokerage houses does not leave an individual broker a lot of room to consistently buydown on every deal. Yes you can buydown and match here and there; that's just a catch up game for you. But I ask...what is your game plan?

  • ssureR on 2012-06-19 5:30:07 AM

    How do you know that True North is buying this down? Dont they do a lot of volume?

  • Brandon on 2012-06-19 5:48:26 AM

    A business model that differentiates on price is not a business model at all. We shall see how efficiently this ‘model’ operates when volumes and commissions decrease substantially in the coming year. The banks need not increase their sales force with one dimensional thinkers in our industry. Good luck when the going gets tough.

  • Bill Jones on 2012-06-19 6:52:38 AM

    Its A Business Model Stupid - why so condescending in you anonymous "name"?

  • DD on 2012-06-19 7:08:22 AM

    Are you kidding me Brandon??? Whats the first thing people do when the times get tough? They look for the lowest rate...I would say the same to you, good luck when the going gets tough.

  • Ron Butler on 2012-06-19 8:35:06 AM

    I have no problem putting my name on this post.

    Dan at True North has built a completely valid business model that provides perfectly fine levels of service at multiple convenient locations and is clearly offering very low rates.
    It is NOT a commission-centric business model; hence the bad feedback. I do know that it takes a lot of blood, sweat and tears to build a strong inter-provincial business like True North. It did not build itself.

    What the heck is wrong with creating a different model if the public is happy with it?

    Are Dan's saleried licensed agents the greatest minds in the mortgage brokerage business. Maybe they are and maybe they're not, I do not know that answer. That being said I have met some pure commission mortgage brokers who would fail a saliva test. I have also met some stone genius mortgage brokers who are a lot smarter than I am. That's just the way the world is.

    For everyone who talks about Walmart like it was a curse word let me bring you in on a secret: if Sam Walton was still alive he would be the richest person on Earth by triple! Bigger than Gates, Slim or Buffett combined, just add up the net worth of the heirs, these are facts. So much for the idea that differentiating on price is not a business model.

    As Dustan so perfectly said: "It is what it is".

    In the interest of full disclosure; we are also offering 2.99% 5 - year.

  • Reply-Its A Business Model Stupid on 2012-06-19 9:11:01 AM

    "It's the economy, stupid" is a slight variation of the phrase "The economy, stupid" which James Carville had coined as a campaign strategist of Bill Clinton's successful 1992 presidential campaign against sitting president George H. W. Bush...some people don't get that anecdotal phrasing, don't think it was meant to be mean spirited.
    Anyways, yes if in the coming years, volume and commission does decrease, then everyone is in the same boat as well and I bet those "low cost" producers will be able to adjust better than those without a system or strategy in place. Its all relative. Remember who started the rate war against the banks 30 years ago, brokers. Now that the banks are fighting back and brokers are trying to grasp at a new selling strategy. Some resort to selling value while others on price head on with banks, nothing wrong with either way. There is a different business model for different folks. But to criticize one model vs another because one does not like how it may impact the industry is not fair either. The industry is the industry. A business can't think about the welfare of its competitors in business. Business looks out for its own best (shareholder) interest, not others. Its free enterprise after all. Competition is good for everyone. And the winner is the consumer.

  • Dave Henderson on 2012-06-19 9:20:07 AM

    Anyone can do this module, I call it "pathetic broker" basically you just buy rates down, advertise on online websites and wait for your phone to ring. Not really creative. Just a way to shrink everything that a broker who actually does this for a living. IMHO - they are really shrinking our market, and this creates more issues for the community in the future. Thanks True North for not thinking outside of the box.

  • Greg Williamson on 2012-06-19 9:24:09 AM

    Sadly, "Its A Business Model Stupid", (I do really wish people would use their real name on these) is bang on.

    True North is a market disrupter, for that I truly love having them around. I love disrupting markets too.

    I advocate that brokers can not follow this model for the same reasons that "Business model" said. I would say though that there is certainly another way. I am preparing my business and my mind for re-framing this silliness that "customers only want the cheapest rates" and rather say "How can I sell my clients mortgages at higher rates then my competitors?" Once I go there then I need to figure out what else I may need to add to my offer to compel them to want to do that. I of course need higher margins to sustain that business model. This for me, is the place I choose to be, instead of in the shrinking margins crowd.

  • cj on 2012-06-19 1:12:32 PM

    Hey Dave Hendersen, all you have to do is visit one of True Norths locations and you will see out of the box thinking!

  • Don C on 2012-06-19 11:21:50 PM

    Unfortuate reflection of an industry which lacks quality individuals who can capture consumers based on professional planning. Sad.

  • Gary Grant on 2012-06-20 12:31:09 AM

    It is well known that True North has a close relationship with ING. If it is ING, are they doing the right thing by telling their clients that these are collateral charge mortgages secured to 100% LTV? Or are they simply playing the game and using this to generate leads and putting clients into other products. On the other hand, if it was ING, then the offer would be country wide, not just BC and Alberta. Perhaps a call to the regulators to alert them of this offer would be in order. In Ontario, you have to be able to prove that the mortgage rate is not a "teaser" to get clients into the door.

    Business model? Cutting profits (commissions) is never a sign of a successful business. True North has a huge overhead and perhaps this is the beginning of the end for them. (Yay!)

    I agree with Don C especially when you consider that Financial Planners are moving to a "fee-based" model.

  • Paul Mangion on 2012-06-20 3:16:44 AM

    This is not news. He is simply getting the free attention they seek by offering this as news. Hats off to his marketing genius and shame on MBN for listing this as news! Vernon where you short on ideas this week?

  • Bill Jones on 2012-06-21 6:02:24 AM

    Forgive me for not getting the 20 year old James Carville anecdote – now had you use a quip from Ken Mehlman then there’d be no need for further clarification.

    No need to be “mum” about it – the lenders are Firstnational and Street (bought down to 2.99%) - just call and ask.

    Ron Butler - I don't agree with, like, or support the business model of Walmart and I certainly could care less about the net worth of the Walton family (excluding, of course, John-boy J). Just because a business model is successful doesn't make it right or "good". I don't shop at Walmart because I see the effects it has on our economy - Sam Walton may have been uber rich, but on the backs of who? Been to any mom and pop hardware stores lately? Done any mortgages recently for someone in the manufacturing sector? You/he can do ANY business model you like but that doesn't make you immune from criticism. I'm sure True North doesn't care about the broker industry as a whole so this is all a waste of time anyway. They are looking out for their own (shareholder) best interest - sounds like a Kevin O'Leary soundbite. Buy the rates down, pay for legal, pay realtors, even offer free beef - just don't put it out there like you're some kind of mortgage Mother Theresa who is truly concerned about someone who just Googled you and that you've never even met. True North doesn’t buy down rates because they “put our customers first". They should just say it like it is, "We have to buy down rates to get business". I'd agree with, like, and support that kind of transparency.

    I have a relationship-based “emotional” business model (The Dragon’s Den would crush me). I find business based solely on price to be hollow. Maybe my model won't continue to work and I'll have to become a Walmart greeter, but even that may be in jeopardy as I bet they're working on a "greeter robot" as we speak. I think it's a shame that EVERYTHING (with the exception of pork bellies) is considered a commodity these days.

  • Ron Butler on 2012-06-23 4:31:46 AM

    Bill................ you make fair comments. Many people hate Walmart's business model, and yet many millions of people shop at that business model every single day. Many millions of people are grateful for the low prices because they need the low prices, every single day.

    Everyone who know me will tell you I am the actual total opposite of Mother Theresa.

    All that being said, be careful about presenting yourself as the high touch, emotional guy who has a super relationship with all his clients. After all, if you really loved your clients wouldn't you want to buy their rates down? Or at least you would offer them the bought down rate with the suggestion they would want to take a higher rate so you could earn more income because you were all such good friends

  • Linda on 2012-06-23 5:50:58 AM

    First brokerage? We had a 2.99 five year business as usual no restrictions mortgage last December .. I was so annoyed with BMO hoopla earlier this year .. and no buy down .. so not seeing how this is news - and exactly - we can all buy down our commissions to provide that .. but good for them for jumping on it and promoting themselves!

  • WOULD YOU PEOPLE STOP on 2012-06-23 6:07:47 AM

    True North was able to do a bulk buy down for all of their clients is something to pay attention to, negative or not – good or bad, it is going to draw customers through the doors. Many of those clients will likely take the 2.99 rate, but some won’t – they will want a different product, or won’t qualify, etc. BUT THEY WALKED THROUGH THE DOOR TO ASK ABOUT A MORTGAGE.

    There are very few brokers that have not bought down rate for a client to compete on rate. The reality is that we, brokers, have created an industry that is rate driven to the extreme - we have spent the last 20 years telling the customers that we can get lower rates than the banks, and that is how we built our industry. You can deny it for all time, but it is the simple truth and is proven by decades of factual information. Up until a few years ago it was that way, now it is not. Brokers are screaming because they can’t get that rate, they are complaining, they nay say the companies that offer it. FINE. You know what? IT IS CALLED COMEPTITION. Right or wrong, that is what it is, and it is not going anywhere. Suck it up.

    People come on here and they complain about the rule changes, that they can’t get a better rate than the banks, that someone has a different marketing plan or business model. They talk as though they are god’s gift to mortgage brokering, and often put down other commenter’s on articles. Instead of sitting around like a bunch of helpless oafs, do something about it. You want to change the industry? Want to change the way we are perceived by the consumer? Get off your rear end and DO SOMETHING.

    Complaining and putting down others who are not afraid to try something new, or do something unique only demonstrates that this industry is full of a bunch of tired, spoiled, whiney brats who don’t deserve to have they attention they are seeking.

  • Bill Jones on 2012-06-26 11:35:37 AM

    Ron, I'm no Mother Theresa myself (I look more like Ghandi) but even that's a stretch - lol.

    As far as not buying rates down because I "love" my clients goes, my conscience is clean. I need to make a living just like anyone else and I DO think that my time, knowledge and experise have monetary value (the same as most other vocations). Our "service is free" but I can't work for free. If I don't make money then I can't spend money in my community and therefore can't support many of those whose mortgages I do. It is really simple trickle down economics. Some people may not look at it that way but I do. If I don't make money then I'd HAVE to shop at places like Walmart and that is exactly what big corporations want (i.e. for me to be dependent on them). I went to a movie the other night and my ONLY option was to buy my ticket from a machine (the same automation that is creeping in at your local Safeway - not to mention adeversely affecting our friends in the appraisal business). These "changes" result in loss of jobs because companies are looking to increase profits (disguised as increasing customer convenience).

    When doing a mortgage I'm not giving a rate that is HIGHER than offered by a lender in order to fill my pockets, I'm just not buying it down. We had Platinum status for several years with Firstline and never banked ONE SINGLE basis point because we chose to never sell above the "floor" or "float" rate. We refused to take from one client to benefit another. Anyway, I'll leave you with this little nugget:

    There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man's lawful prey. John Ruskin 1819-1900

    Would You People Stop: As an "Oaf" I'm flattered that you took the time to anonymously acknowledge this thread.

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