“Any time you have another source of funds is a good thing but you do have to advise clients about the lender,” Blair Anderson of Anderson Associates told MortgageBrokerNews.ca. “With credit unions you have to become a member and for some people it’s too much effort.”
DUCA Credit Union recently made headlines with its 2.99 per cent retroactive mortgage rate and, more recently, when it dropped its five year fixed-rate to 2.79, which brokers have been buying down to 2.69 per cent, according to the Financial Post.
Credit Unions operate under different regulations than the big banks, which often allows for product offerings brokers can’t get anywhere else.
“They certainly have gotten popular especially with the B-20 rules that restricted banks to doing lines of credit only up to 65 per cent while the credit unions can still go up to 80 per cent,” Anderson said. “People have seen the promotions and (credit unions) are becoming more top of mind.”
According to Angela Wong-Liao
of Invis The Mortgage Lady, credit unions offer a favourable alternative to banks and monolines because clients are comfortable with their positive reputations and competitive offerings.
“The credit unions can do co-op financing which banks don’t touch and they are governed by different rules,” Wong-Liao told MortgageBrokerNews.ca. “Membership is easy to attain and the credit unions often have arrangements with broker networks that make it easy for brokers to send deals to them.”
Credit Unions are quickly gaining market share and favour among brokers with their competitive rates but industry players realize proper client disclosure is required.