Big lenders will follow BMO bandwagon

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BMO’s posted 5-year-fixed rate of 2.99 is nothing new, says True North’s CEO Dan Eisner; still other major lenders will be quick to follow suit despite warnings from federal finance minister Jim Flaherty of a potential rate war.

“Flaherty is very conservative by nature. But we’re not a communist country yet; the banks are still allowed to make their own decisions. In the end, market forces will drive this,” he told MortgageBrokerNews.ca.
 
Eisner does admit that the lower rate is great news for True North and brokers in general, but it isn’t the big splash that BMO’s 2.99 announcement was back in January of 2012.
 
“This time around, it’s nothing special,” he says, pointing to a large cross-section of the industry that has been offering a similar or even lower rate. “If they could offer it at 2.79, that would be news!
 
“Fundamentally, the BMO rate is not that special. There are a lot of similar or better rates out there right now. And anyway, the posted rate isn’t the true rate being offered at the banks,” Eisner points out. “Rates are being set by consumers using the rate websites, not the banks anymore.”
 
Mortgage rate websites, like RateSupermarket.ca and RateHub.ca, are what is driving the market, argues Eisner.
 
“Anyone in the business who thinks that people are going to a bank to get a rate quote for their mortgage is still using fax machines and rotary phones,” he says. “Rate sites and the internet have fundamentally changed the way we do business. In eight seconds you can have the best available rate on your phone in the palm of your hand.”
 
As of Thursday, the best fixed 5-year term was available from Verico Butler Mortgage at 2.77 per cent on RateSupermarket, while Dominion Lending Centre, True North and Mortgage Emporium each offered 2.79 per cent on RateHub.
  • Derek Rowley on 2013-03-09 6:06:45 AM

    Here is my take on this. With regards to the so called rate war, low rates are great, but as in my cases as a rural agent, over the past 2-3 years we have lost 3 manor and I do mean major employers - Ford, Sterling and Timkens just as an example. Wit literally thousands of jobs gone and never to return, I really do not have the market i once had. My neighbour told me recently that where he works, they have gone from 3 shifts down to ine sgift and now that shift is receving lay off notices. Another major employer hitting bottom. Without ibs, you have no clients and you can lower tge rates even more but you still need clients with jobs.

    I can see where Flaherty and perhaps the B o C saying enough is eough and we will not only see more changes coming down the puoe, we will see rate increases.

    The industry has changes so drastically for the worse and we are 5 years now into this so called recession and there is still no end in sight. refis and BFS are prety well done unles you have a "B" lender or private lender.

    As for myself, again as a small rural agent, low rates and all the technology in the world does not replace unemployment. It may be a far different story for those of you in major urban centres, but out here in the boonies, we are feeling the effects of all that has and is taking place.

    Continued good selling to all

    Derek Rowley

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