Brokers to Mono-lines: Time to REALLY take on BMO!

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It’s enough to give even the hardiest brokers indigestion, but BMO’s re-introduction of that 2.99 per cent on a five-year fixed is a direct call to mono-lines to match that offer – not just on rate, say brokers, but on term.

“In my book it’s a sign of desperation and a sign that they’re trying to gain market share,” John Dearin, owner of Dominion Lending Centres Mortgage and More, told “That said, I’ve already had a client fax me the BMO offer and ask ‘What can youI do?’

“The mono-lines need to step up to the plate on this one and match that rate but also the five-year term to help out the brokers. If they want us to stick with them, they have to support us brokers.”

That challenge echoes BMO’s.

The big bank trod out the offer, in effect until March 28, late Wednesday, dangling the same no-frills options as its record-setting offer in January; i.e., 25-year amortization and limited prepayment terms.

Industry criticism of those restrictions aside, said BMO’s head of Canadian retail operations, no lender effectively matched its five-year term in January.

“They matched us on the rate, but on a four-year term,” Frank Techar told reporters Wednesday. “We offered one more year of protection against rising rates. To be really clear, none of them matched us back in January.”

Almost all of Canada’s other big banks are expected to pick up that gauntlet by the end of the week. TD was among the first to move, but with 2.99 on a four-year.

The question for Dearin and other brokers is will the mono-lines follow suit with more a longer term than that..

“I believe they will,” he said, within hours of this latest announcement. “One has already matched the rate and we expect another to match the rate and the term.”

Even if they don’t BMO’s move to reignite the rate wars may pay off for brokers. It did in January.

“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 “I stop short of thanking BMO, though.”

He’s not alone, with several brokers having reported 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.

The returns for BMO may have been more meagre.

While BMO saw its overall profits spike by 34 per cent in the fourth quarter – and during its January offer -- much of that growth came courtesy of U.S. operations and lower losses on bad loans.

Profit from its Canadian book actually shrank, with higher volumes across most products “more than offset by a less than favourable mix and lower net interest margin.”

That’s perhaps the most concrete analysis the bank is willing to offer on the success of its special January rate. Analysts are suggesting  that limited-time offer – 2.99 per cent on a five-year fixed – likely helped to grow BMO’s mortgage market share in the first quarter, but at the expense of profitability, in that it further narrowed interest rate spreads.

  • Joe on 2012-03-09 3:56:23 AM

    Yes it IS time for one or more of the Monolines to stick it to BMO with a lower rate than 2.99% or better terms and amortization at the same rate. I already have one lender at 2.99 but CMHC only, so they need to do conventional next . We need more monolines on board with some firepower to blow up BMO.

  • Jim T.. Advent Mortgage on 2012-03-09 3:57:20 AM

    I don't know what all the fuss is about. According to Williamson, rate is not important at all to clients. All they want is to get fantasic advice and service and really don't care about rate. Well Williamson and company, lets see how you fare now. Good luck!

  • Peter D. on 2012-03-09 4:46:55 AM

    Jim T - If Williamson admits that rate is very important to clients, his "coaching value prop" to brokers/agents is toast. And by the way, I agree with you.

  • Omer Quenneville on 2012-03-09 5:09:18 AM

    We really do need an education marketing program to teach clients about mortgage and that rate is only one part of a big overall picture. I have clients that have taken what they though was a good rate only to find out all there saving acquired were lost to huge pay out penalties..

  • Doug Adlam on 2012-03-09 6:04:53 AM

    You will live and die by the rate, if that's all you have to offer. Look at the product - it is a no frills mortgage. I personally know of a recent scenario where a client threatened to sue BMO over the product - as they had it, and did not understand it (they settled out of court). Frank Techar states that no one matched their rate - but who would be willing to offer a premium product at the rate of a discount product? We don't see Mercedes Benz matching the price of a Kia - so why would we expect the mortgage industry to be any different? Unfortunately in this case, Kia (BMO no frills) thinks their product is just as good as Mercedes (premium mortgage products).

  • Ravi on 2012-03-09 6:25:08 AM

    The BMO offer was not great when they first pulled it out, and it is not great again. I had clients inquire initially but once they knew all the ins and outs, they were out! Much better produc on the market.

  • C. Charlton on 2012-03-09 7:05:51 AM

    There's already 2 lenders that brokers can deal with to give clients 2.99%, with much better terms and privelages thans BMO's. Do your homework brokers!

  • AB Broker on 2012-03-09 7:11:18 AM

    Jim T, you make me laugh. An opinion is just that, an opinion and because it differs from yours doesn't make it wrong! Your obviously miserable as rarely do you have anything positive to say! I can't imagine that I'd be too happy cutting rate and working for 50 cents on the dollar either, haha. How's it working for you? I know, now you're going to throw some big numbers at me, lol. They don't impress me and neither does EGO.

    Why do some feel they have to compete rate to rate? What about a two year fixed and switch to variable once the discounts come back? What about the 10 yr strategy at 3.89%? There are so many other options and I think too many are getting side tracked.

    Lets all wok together and fight the good fight! As professionals we owe it to ourselves, our colleagues and our industry!

    Have a great day everyone!

  • Who? on 2012-03-09 3:43:47 PM

    Who are these lenders offering 2.99% to brokers? Can anyone help a broker out and share some names?

  • Greg Williamson on 2012-03-09 4:39:56 PM

    I continue to maintain that everyone will have there own way to respond to this and other increasing challenges to our industry. Jim, I have repeatedly said I respect your right to choose your model. Obviously we hav a difference of opinion. Here's the good news for both of us. Today, it seems each of our models are working for each if us, since we both are happy to take a stand for them respectively. The question that I think might be the most important is will we both be happy tomorrow with our respective models? Time will tell I guess.

    By the way, my offer still stands, anytime you would like to join me in a LIVE webinar for the industry where we might have a healthy discussion abou our stances I am ready when you are.

    I really think that would be much more helpful for everyone then resorting to "pot shots" in an industry forum.

    Greg Williamson.

  • on 2012-03-09 4:52:18 PM

    At the end of the day, it's a great price point for a very small part of the market. I'm using this opportunity in the exact same way that BMO does when the client gets infront of them: up-sell. As soon as the client realizes the potential headaches, they want alternatives which we as Brokers are capable of providing.
    Jim, you're a successful guy so you shouldn't slag Greg on his style nor should he of yours.
    This field is about to get a lot tighter and in my opinion, providing value through product knowledge is key.
    I also see the B side of lending increasing dramatically so as long as Broker lenders increase their positions here, I say let BMO try to capture this part of the market anyway.
    I personally have had very low success with a "Rate Shopper" and have had more headaches with them than worth the 40 BPS it would pay (if the deal ever closed anyway).
    All the best for 2012, Brokers!

  • S Ballard on 2012-03-09 6:22:59 PM

    Wow. I find it hard to believe personal attacks would happen against someone, like Williamson, who offers a refreshing alternative then to compete solely on rate and terms.

    As with any industry, changes happen and we should always search for fresh idea to stay ahead of our competition...a way to provide impact for our clients. If we as brokers are narrow minded in our thinking, then I guess working twice as hard for half the commission becomes our new business model. If that's the case, I think one would need to freshen up the resume, go work for a bank and learn to underwrite the deals I send because I'm not competing rate to rate or term to term. I'm competing "strategy to no-strategy" and it's working.

    Where is the strategy in limited pre-payment options...will BMO's strategy to help people become mortgage free quicker using a 25 year amortization and a lower 5 year term.... serve that cause? I think not!

    It's refreshing strategies, such as Williamson, that has dramatically increased my business and my volumes no matter what rate any lender throws out there. Rate is NOT everything and those who think I'm wrong will be weeded out from this industry and those who compete rate to rate, term to term devalue the brokerage industry as a whole.

    Hats off to Greg Williamson and 180 Degree Academy to bringing a fresh prospective to me, and the industry as a whole.

    OH yeah.....almost forgot CAAMP provides 8 AMP credits for individuals who complete his course...the highest in the industry?...for just advise and service??? Jim your homework before making statements about something you have no clue about!

  • Chad M on 2012-03-09 7:23:13 PM

    @Jim T & Peter D ... Please, step outside of you self for one second and let your mind drift to a place where a monoline lender does NOT come to your rescue to match a rate. Hmmm ...then what? If you Never have the best rate what would you do? Jim: you make it sound like that's all Greg talks about is fantastic service. Your forgetting about being able to offer an exclusive cash back when a client buys or sells a home. I gues you also forgot (errr ...didn't know) to talk about an exclusive online dashboard that captures leads from your customized affiliate link from the Canadian Home Buyers Academy dot ca & Money In Your Mortgage dot com websites. I can keep going if your like Jim ... This service you speak of also includes automatic rate alerts when rates eventually do rise. These are delivered to the broker and client. Now, just to be clear ...I think brokers, for the majority of the time will have lower interest rates than the banks. So Jim, for the odd time rates are reversed, it's NEVER been about interest rate. And Peter: just re-read the last three sentences about Greg's "value prop" and jump in one of his free trials ...if you'd like you can share an account with Jim.

  • Nawar Naji on 2012-03-10 1:22:42 AM

    Each business owner is free to choose their business model; some choose to compete on price and others have a different proposition, however attacking another mortgage broker is not professional. If we want the public to view us as professionals, we ought to behave like professionals. Having a healthy adult discussion regarding our industry is necessary. Yesterday at CAAMP, Mike Beckette gave a great speech about the status of this industry and where we are headed if the status quo remains the same. It's unfortunate how divided and fragmented this industry is. Look at the banks, they compete against each other but they don't slander one another. Let's raise the bar and best of success to all.

  • Ontario Broker on 2012-03-10 5:05:07 AM

    I do not recall the last time I lost a deal on rate but the concern is just getting the opportunity of speaking to the client so that you can offer all your great advice before they walk into a BMO branch.

  • Ron Butler on 2012-03-10 9:21:19 AM

    I agree there is room for all business models in our space, Greg has proved there are systems that can differentiate a broker and create leads with third parties that loop back to us with added value and that rate may not a driver at all; especially if you develop the prospect in the first place.

    Jim has established that excellent service and top quality advice combined with leading edge rates can attract high end clients who are on their third mortgage and are much more rate oriented by nature. The difference is I have seen Jim attacted in the blogs viciously by people afraid to use their real names and I cannot blame Jim for pointing out the reason that BMO brought back the rate offer: IT WORKS.

  • Karen Boies on 2012-03-10 11:52:24 AM

    I feel compelled to add my opinion here, I am a mortgage broker developing and growing her business. I am interested in strategies that genuinely help my clients achieve their goals and become mortgage free sooner.

    When I started in this business, my mentor – the broker owner, told me regularly, don’t be a rate broker. I kept meeting clients and it was all about the rate. Whatever I was offering them was not that valuable for them, because they’d use me to get the subjects removed, then off they went with my paperwork to their bank to “match” the rate. It was clear that I needed to figure out my value proposition beyond “I will find you a better rate”.

    Then I was introduced to 180 Academy through my broker/owner. I joined 180 Academy and dove into consuming the plethora of information Greg Williamson has developed and provided online.
    Working with Greg Williamson and 180 Academy has worked for me and in turn my clients and referral partners have benefited from that. I am more confident and prepared when I meet with my clients. I spend the time to learn what are their hopes, goals, biggest challenges / concerns when it comes to securing their mortgage. I have real strategies that help my clients reach and achieve their financial goals. I have real programs that help my referral partners grow their business. My closing ratios have improved dramatically in this business cycle, while there have been “rate wars” going off around us.

    I am not afraid of the current 2.99% rate offering, because I have strategies that help my clients manage their mortgage, save their money. Yes there are clients who don’t care about the strategy – they are all about the rate and shop and grind out the last bps., Now I know how to identify the rate shopper and let them move on to a rate broker, because that is not the business I’m in.

  • Mark Norman - St. John's on 2012-03-11 4:16:21 AM

    am about to launch an unprecedented offer in St. John's, NL, to counter the current launch of BMO's new rate. What's the challenge? I am offering $299 to any client that brings their BMO offer into my office. Comparing their exact offer, I am confident I can save those clients more money with a different lender/product with a better strategy, but if not, I will pay them $299 in cash and they can go back to BMO with my money in their hand and get their mortgage there. I want to encourage other other brokers across the country to join me and lets make these headlines about us. The banks get far too much press as it is.

    I believe if we all reach out and get enough brokers to take this stand of solidarity, we will gain national media attention (hopefully with Caamp's support). It will give our industry a chance to voice our opinion on this blatant attempt to make everyone believe that the lowest rate is the best strategy for all clients, in every situation. It could be the most cost effective way to yield awareness for brokers as they're going to be interested to learn that the broker community has challenged the bankers at their own game and we're prepared to put our money where our mouths are. The real win here, will be a positive impression on those who aren't shopping for a mortgage today who hear our story, as it will surely have them take a closer look at the broker channel when their time comes.

    I have already been in contact with CMP magazine,, the Atlantic Broker Council, the MBAAC and Jim Murphy of CAAMP and would like any assistance you can offer to spread this message. We all know that if we're comparing a rate and no strategy vs. a great rate and a great strategy, we can mop the floor with this offer, and for every 10 people we convert, we just might pay $299 to someone who is so blind they can't be helped. That is certainly an acceptable loss as the bigger picture here is a very cost effective way to get our message out to the masses. (Every year the Maritz Research report always remind us that we are doing a terrible job at this). We can either rally together now or sit idle as BMO sends their message out to all Canadians that counters our entire philosophy. Just as long time lenders are deciding to exit the broker channel, the rest of the industry is watching our reaction to these "shots across our bow" closely. If we do nothing, I assure you, other lenders WILL follow this model and this will be only the beginning of a much larger battle that will face us all in the immediate future.

    I will not surrender, be swayed, or silenced in my pursuit. I will dig in, rise to the occasion and do something about it.

    What do you have to lose by not joining this challenge?


    Please pass this on, and engage everyone you can in taking this challenge.


    Mark Norman- AMP
    Verico ACME Mortgage Professionals

  • Glen Kelleway on 2012-03-10 7:29:25 AM

    I just had a client go into BMO and they left realizing that I have and will continue to provide the service that they wanted. Taking the time to provide options to fit their situation. From that they will choose a solution that will work for them not what was easy for BMO to fund.

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