Manulife, the mouse that almost roared

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Manulife’s decision to reverse a 20 bps mortgage cut – only after a phone call from the ministry of finance – is drawing criticism from brokers, but also praise.
“I understand the finance minister’s totally reasonable desire to hold the line on household debt levels and also slow down overheated property values, but I also believe that Canadians are entitled to get the lowest possible mortgage rates that a financial institution may choose to offer,” says Will Butler of Butler Mortgage. “Why hurt the people who don’t want to borrow any additional money and just want a great renewal rate?”
With a shelf life of hardly a day, Manulife reversed its posted 5-year fixed rate offer of 2.89 per cent yesterday back to 3.09 after an official from Finance Minister Jim Flaherty’s office contacted Manulife Monday night, expressing the minister’s dissatisfaction with the new rate.
“After consulting with the Department of Finance, Manulife Bank has withdrawn the promotional campaign and reverted to our previous posted rate,” read a Manulife statement emailed to
“I agree with what Flaherty's trying to do,” adds Paolo Di Petta, a mortgage agent with EQRON Mortgage. “Rates are going to go up eventually; it would be better if the change is gradual so that people can adjust instead of an overnight shock.”
When speaking to reporters yesterday, Flaherty was quoted as being “pleased” with Manulife’s decision to return to their previous rate, adding that he had personally telephoned BMO when that major lender posted a 2.99 per cent 5-year-fixed rate in early March.
At the same time, Flaherty publicly cautioned the big banks not to engage in a rate war that would overheat the housing market, increase debt, and potentially damage the still-fragile economy. Yet as one industry CEO points out, there are much lower rates still available within the channel.
“Truth is, both the major banks and non-traditional lenders have offered and closed mortgages for even lower than the 2.89 per cent that Manulife advertised, they just tend to stay away from a full advertising blitz to that effect,” says Chris Karram, founder and co-CEO of Safebridge Financial. “Rates are not the only variable to be taken into consideration when shopping for a mortgage, but as this recent decrease and in turn increase in rates has proven, rates certainly get people talking.”
Karram cited his business partner Drew Donaldson, who was quoted in the Globe and Mail stating that he has been able to get his clients 2.89 per cent on five-year fixed mortgages for about a month, and the same rate from TD for about two weeks, adding that “they just don’t like to over-advertise it because the government kind of slaps their hand.”
Although BMO’s posted rate is 2.99, it is understood that rates are easily negotiable to as low as 2.89 per cent for a 5-year fixed mortgage. Mortgage brokers have been offering 2.84 per cent on some 5-year deals, while True North Mortgage listed a 2.79 per cent rate on Ratehub, with Butler Mortgage offering 2.77 on RateSupermarket.
RBC countered last week with their Rate Match mortgage offer, pledging to match the rate of any of the 10 big lenders.
  • S Vuceta on 2013-03-20 8:39:04 AM

    by the Minister of Finance's logic, variable rate mortgages should be extremely dangerous(only because they are below 3%), but he does not call for that rate to be moved up. Nor does he challenge the car/furniture/electronic companies that provide 0% financing to stop their practice. If the good Minister wants to protect the Canadian economy he should worry how he spends the government's money and stimulates the economy, and let the mortgage broker find the best rate/options for his client.

  • Omer Quenneville on 2013-03-20 8:45:17 AM

    When I quote a rate I ask the client not to switch for a match, but I let them switch if the bank will beat. I explain only a match is unfair and my clients tend to agree.

  • Jake on 2013-03-21 9:50:28 AM

    It's obvious who controls Flaherty! The major Banks.
    Looking at interest rate trends for a ways back in history you will notice that rates started to drob when the internet made it possible to transfer mnoney more easily! Before in Canada we had 13 million peoples worth of cash to bargain over that was controled by the big banks, now we have 6 or 7 Billion peoples worth of cash at our finger tips! There is way more cash out there than borrowers!
    You think rates are going to raise? I think not!

  • Rosemary Madden on 2013-03-21 1:06:26 PM

    I tend to think that the Finance Minister should tunr his attention the the high interest unsecured debt that Canadians are being bombarded with, it is far too easy for Canadians to obtain this type of credit not only from the credit card companie's but also from the major banks. From my years of experience this is the road to that leads to financial problems with many borrowers.

  • Omer Quenneville on 2013-03-21 7:58:17 PM

    Where is the Competition Bureau when you need them. Isn't this price fixing?

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