Lenders are duking it out over business and offering special promotional rates to their rival’s clients – much to the chagrin of one leading broker.
“The big issue I have right now is the live-deal specials that lenders offer; a lender will publish a new special rate that is only for new business if that client has an existing deal in progress with another lender,” Tim Hill of Dominion Lending Centres
Primex Mortgages told MortgageBrokerNews.ca. “It’s a bid to get clients away from other lenders and they all do it but they also hate losing clients.”
The biggest frustration comes when two lenders offer the same live-deal special, but the existing lender won’t match the competitor’s promotion for that particular client, according to Hill.
The scenario creates a conflict of interest for the broker because he wants to get his client the best rate, but he has to cancel the deal with the existing lender.
“Say I have a client with lender A at 2.69% and lender B announces a 2.59% live-deal special,” Hill said. “Lender A comes out with its own 2.59% special but that client won’t qualify because he is already considered an existing client.”
MortgageBrokerNews.ca obtained an email sent by one leading lender to brokers announcing this type of deal. The conditions for the 2.59% five-year fixed rate were as follows:
- New business and live deals only
- Maximum buy down to P-0.85% | 2.49% | 2.14% allowed
- You must indicate in notes - 5 Year Fixed Promo or
- 3 Year Fixed Promo or 5 Year ARM P-0.65%
- 120 Day Rate Hold
And while Hill, who is based in Vancouver, has been struggling with an increase in these types of promotions, it appears the trend may be specific to hotter housing markets.
“I have not head of this sort of deal; the only thing I’ve had trouble with are quick-close deals,” Steven Klassen of Verico
One Link told MortgageBrokerNews.ca. “In Manitoba I haven’t seen lenders do anything like this.”