Credit unions are cashing in on the opportunity to snag business from other lenders in the wake of three big banks and one monoline announcing rate increases last week.
“While some Monolines are 3.79 per cent on a five year fixed; DUCA Credit Union is advertising 3.29 per cent on RateSupermarket,” Ron Butler of Verico Butler Mortgage told MortgageBrokerNews.ca. “And as of last Thursday Meridian Credit Union was offering the same rate 3.29 per cent to Brokers at a reduced commission.”
At the time of press, DUCA offers the best five year fixed rate – holding on to the 3.29 per cent rate with a rate hold of 90 days according to RateSupermarket.ca.
Deepak Bansal of Dominion Lending Centres Mortgage Village has taken advantage of the low rates by submitting a deal through DUCA late last week. He also has two pending deals for first time buyers that are interested in getting into a fixed rate before they inevitably increase.
“I am using the credit unions more to recommend to clients because their rates are so low,” Bansal said. “I’m noticing, on average, 30 basis points difference.
“It’s not always the credit unions who raise their rates last,” Bansal added. “But generally, they follow the banks and monolines; how much later it differs -- it can be days or weeks. Right now we’re at a week.”
While Bansal admits rate isn’t everything, if the credit unions offer a competitive product at a better rate than the monolines or big banks, he will recommend them to clients looking for fixed rate mortgages.
“It’s good for us and for our clients because we still have competitive rates to offer,” Bansal said. “It’s not all about rate, though: if the product is good for the client I will recommend one of the fixed rate options that the credit unions have. It has to be the right product, though.
“I’m going to look at DUCA, for example: I make sure the bells and whistles they have are what the client is looking for. If the client is comfortable with the credit union and like the features, I will recommend them.”
While they aren’t always the last to raise their rates, credit unions are known to lag slightly behind their industry counterparts. Brokers expect low rates from the credit unions to last another week or so.