Brokers are coming as close as they can to, ahem, thanking BMO for that trend setting 2.99 per cent rate – credited for a January boom and set to expire today.
“I didn’t lose a single deal to BMO because of that rate, but it did prompt a lot of clients who were sitting on the fence with preapproval to get off the fence and to make the purchase,” Ray McMillan, a broker with Home Mortgage Consultants Inc. in Mississauga, told MortgageBrokerNews.ca. “I stop short of thanking BMO, though.”
He’s not alone, with several brokers reporting relatively brisk demand from preapproved and new clients following the big bank’s introduction of its no-frills five year fixed, offered at the lowest rate in Canadian history.
Brokers have been shut out of that product, igniting fears that it would undercut sales at what is usually the slowest month for originations. That simply hasn’t happened, with the tide of media attention BMO receiving over the last several weeks lifting the boats of brokers and other banks, alike.
Mortgage professionals have increasingly channelled client interest into four-year terms offered at the same 2.99 per cent. Those alternatives come loaded with the features that the BMO mortgage lack, say brokers, pointing to available 30-year mortgages and 20 per cent prepayment privileges, among other benefits.
McMillan hasn’t gone that route, continuing to advise clients to stick with the five-year term, even at a higher rate. It’s worked, he said, but also has the fact that the underwriting for the BMO product has been very conservative.
“Fewer people are qualifying for that rate,” he told MortgageBrokerNews.ca