“Tip of the hat to Meridian for trying this. Hopefully, it won't bite the client's [when] in 18 months they get a considerably higher rate,” one MortgageBrokerNews.ca reader wrote. “So, we stop sending Meridian business until they enable us to provide that rate.”
However, as others have pointed out, the promotion is a good play by Ontario’s largest credit union, which will look to cash in on the renewal business.
“This is a really smart play. Secure new clients now for 18 months at a really low rate and wait on the renewal to make the profit,” Jackson Middleton of Kilted Media wrote on MBN. “What percentage of new clients do you figure they will retain at renewal? 75-85 per cent? Well played.”
Meridian announced last Thursday it is offering an 18-month fixed-rate mortgage at 1.49 per cent, stoking the flames of the rate war. It’s the lowest posted mortgage rate in Canadian history.
Although several brokers quickly applauded the product, Diane Medeiros, manager of media and stakeholder relations told MortgageBrokerNews.ca that the rate is only available through the branch network.
“It's too bad a monoline didn't come up with this idea first,” Middelton wrote. “And it's too bad that likely none will follow suit.”
This isn’t the first time Meridian has offered special promotional rates exclusively in-branch.
A year ago
the credit union offered a 2.99 per cent five-year fixed through its branch.
"We do have … a pretty competitive rate available for brokers," Bill Whyte, chief of member services at Meridian Credit Union told MortgageBrokerNews.ca at the time. "Where we focus for brokers is on niche mortgage products – that’s business-for-self mortgages, construction mortgages."
With Meridan Credit Union’s refusal to offer its broker partners access to its record-low rate promotion, several players are suggesting a boycott.