The clock may be ticking on bank-offered cashback, but the largest credit union in Ontario is now committing to offering 100 per cent financing until its regulator says otherwise.
“We believe that the five per cent cashback down payment is a great product for the right consumer,” said Rick Arnds, senior manager for emerging markets at Meridian Credit Union. “We will continue to offer 100 per cent financing until directed not to do so by DICO (Deposit Insurance Corporation of Ontario).”
The announcement comes as federally regulated lenders begin to announce that they will stop offering cashback mortgage product in compliance with new OSFI guidelines. Many banks have been slowly winding down their cashback offerings, although the first of the official deadline starts October 31.
This week, Scotiabank was the latest to announce it will drop its Free Down Payment program on September 15.
Credit unions have not yet received any directive on the matter from DICO, but the general consensus is that the provincial regulating body will follow its federal counterpart eventually, Arnds told MortgageBrokerNews.ca. “We think, it is only a question of when,” he said.
“Our product is best suited for people who just can’t put together that 5 per cent down because their money may be tied up in RRSPs or what we call good debts such as an outstanding student loan,” he said.