It’s a gamble that may well have paid off, with BMO’s 2.99 per cent five-year fixed helping grow its mortgage book by $1.2 billion in the second quarter, according to the big bank’s latest financials.
"In anticipation of market conditions, we acted to introduce offers that we believe are more suitable for all customers,” reads that Q2 report released Wednesday, “ and we are helping to move the market as a consequence, to a better place.”
Those efforts have also helped to move BMO deeper into the black. It realized a $6.6 billion increase, year over year, in net loans and acceptances for the three months ending April 30. The growth was primarily due to an increase in residential mortgages of $1.2 billion as well as $5 billion in loans to businesses and governments.
That mortgage leap is largely owing to that controversial 2.99 no-friller BMO re-introduced in March, incurring the wrath of other big banks as well as brokers, many of who moved to buy down rate in order to keep clients from going to the Bank of Montreal.
Brokers are now waiting on quarterly results from D+H to determine just how effective they were in keeping hold of that business, although many fought back by diverting client interest into four-year mortgages.
Either way, the BMO offer likely helped brokers to convert hundreds of preapprovals just ahead of the slower market expected across much of the country this summer and fall.
That 2.99 per cent can also be seen as a testament to the challenge the bank has had in growing its mortgage book since quitting the broker channel in 2007.
“Take note of the hoops BMO is having to jump through in order to get back originations it lost after leaving the broker channel,” says Rob Campbell, an agent with Verico The Mortgage Wellness Group. “Absolutely, it is a validation of the broker model.”
The bank watched its share of the mortgage biz drop from about 10 per cent in its 2007 heyday to today`s 6.5 per cent, according to its own stats. March activity helped to boost that figure, although analysts are waiting for reports from the other big banks to determine how successful BMO was in stealing business from its competitors.