That hotly-debated 2.99 per cent promotion from Industrial Alliance may, indeed, put standard commissions in the pockets of brokers using it to make waves in the market, but the absence of one key feature takes it off the table for others concerned it will disadvantage 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. “Industrial Alliance doesn’t have that feature in any of their mortgages.”
Industrial Alliance, of course, made headlines earlier this week when it was reported that the lender is currently offering a sub-3 per cent fixed five-year mortgage. And although brokers have dispelled rumours that they’re buying down rates in order to secure 2.99 per cent for their clients, Faubert and several others aren’t sold on the offering.
“During that five year term if they ever go to sell that house and the dates don’t line up, meaning the purchase and sale aren’t on the same day, which never happens, you have a problem and you have to try to find that five per cent from an (alternative source),” Faubert said. “Full feature mortgages have that bridge financing with them.”
However, Faubert believes mortgages that lack bridge financing can be sufficient for the right client and the right broker. Even if it isn’t for him.
“As long as the customer is disclosed that these are the problems in the signing docs with the clients you have done your service; If they want to save the 10 or 20 basis points in rate to lose that feature, then you’ve done your job.,” he said. “But personally I avoid selling products that are missing (that) important feature.”