That fat lady in blue, red and white has sung and the lowest five-year fixed in Canadian history is, indeed, over.
As promised, BMO, which created a media circus for itself in announcing its 2.99 per cent interest rate earlier this month, pulled that no-frills mortgage from its rate sheet Thursday morning, replacing it with something much closer to the middle of the pack – 3.49 per cent.
A sales rep tells MortgageBrokerNews.ca there are no immediate plans to bring it back.
That’s good news for many brokers who say the trendsetting rate created buzz for BMO and no one else as buyers read those media reports and headed straight to the big bank.
“Anytime a lender does that sort of thing it benefits that lender, not those of us without access to the rate,” Darrick Battaglia, owner of Dominion Lending Centres - YBM Group in Barrie. “it hasn’t been a good thing.”
Not all brokers agree, suggesting the BMO rate led to a mini boom in what is traditionally the slowest month of the year.
“I stop short of thanking BMO,” said Ray McMillan, a broker with Home Mortgage Consultants Inc. in Mississauga, told MortgageBrokerNews.ca. But “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.”
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 like those Battaglia, that it would undercut sales. That may not have 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.
Some of those rock-bottom rates have already begun to disappear, even before BMO put the kibosh on its own 2.99. That’s likely to take pressure off of many brokers who opted to buy down rate rather than risk losing a client to that lady in blue, red and white.