“It drove a ton of traffic to our contact centre, our website and our branches,” Bill Whyte, senior vice president and chief of member services at Meridian Credit Union told The National Post. “In a lot of cases the five-year rate fit them better, and some of that initial interest in 18-month was diverted to five-year.”
In mid-April, Meridian offered a limited-time 18-month fixed mortgage at 1.49 per cent.
Brokers were apprehensive about the offering, many considering it an acquisition ploy to win eventual renewal business.
“What I generally tell clients … is that number one, it’s more of an acquisition tool for [Meridian]; they obviously aren’t making any money on that rate, which is why it’s only on offer for a limited time,” Matt McKillen of Mortgage Architects
told MortgageBrokerNews.ca when the rate was first released. “If it’s all just about rate, when are you going to do in 18 months if rates are higher and you’re going to be in a market where you’re forced into whatever they offer you on a renewal or are you going to set yourself up for a higher yield for the remainder of that three-and-a-half years versus getting into a low five-year term now.”
However, the credit union may have banked on using it to draw clients with the intention of selling them on longer-term products.
Meridian also offered a 2.75 per cent five-year fixed rate at the time, which it also drew attention to when releasing information about the 18-month mortgage promotion.
“As a responsible lender, Meridian recognizes there is no cookie-cutter approach to selecting a mortgage solution,” Whyte said. “In addition to this 18-month mortgage offering, Meridian offers a full suite of mortgage options including fixed, variable, mortgages for business owners and construction mortgage solutions.”
Meridian’s record-low 18-month 1.49 per cent fixed-rate helped attract clients and secure longer-term mortgage for many of them.