Bank to benefit from competitor’s changes?

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Brokers are already considering diverting clients from one big bank to another, following a recent change to a popular mortgage product.

“Why bother selling their product? Credit unions have the CreditMaster [and] Scotia has the STEP … [both are offered] without fees,” one broker wrote on MortgageBrokerNews.ca. “I actually have a National All-In-One, myself, but dealing with National for approvals is far more painful than many other lenders. I can't be bothered to use them when better options now exist.”

National Bank’s All-In-One -- which allows clients to tie their mortgage together with other banking products, including lines of credit and bank accounts – has been popular among brokers.

However, in a communication sent to brokers a week ago, National Bank announced it will now charge clients $6.00 per month to use the product, which had previously been offered without any monthly fees.

Additional accounts tied to the product will also be charged $6.00 per account per month. The previous fee was $2.50 per account per month.

While some brokers have expressed displeasure with the changes, others believe clients may not have an issue with the additional fees.

“The reason that National Bank has switched to charging is because they have the All-In-One chequing feature that Scotia STEP and the others don’t have,” James Laird of CanWise Financial told MortgageBrokerNews.ca. “If a customer is using it as their chequing account, then $6.00 per month actually makes sense; it’s cheaper than the $14.00 you would pay Manulife and the cheapest chequing account at TD is $4.00 per month.

“So those customers who take advantage of all the features of the All-In-One probably still love it at $6.00 per month.”

And National Bank’s competitive compensation may encourage brokers to pass savings on to clients by taking care of certain fees.

National Bank is correct that Manulife charges fees but Scotia does not charge fees for its multi-part STEP product,” Ron Butler of Butler Mortgage wrote. “That being said National Bank offers strong compensation on the AIO product which we use to produce incentives for consumers to switch lenders such as free legal fees and rebated discharge costs.”

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