New Canadian record-low rate not available to brokers

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The credit union offering a record-low mortgage rate isn’t offering it to broker partners, despite interest within the channel.

“This is a perfect opportunity to approach your clients who have 18 months left on their mortgage and are in a higher rate (well, anything will be a higher rate) when meridian releases this via the broker community (which I expect it to),” Jake Abramowicz of Mortgage Edge wrote on

However, Diane Medeiros, manager of media and stakeholder relations told that the rate is only available through the branch network.

Meridian Credit Union, the largest CU in Ontario, is offering an 18 month fixed-rate mortgage at 1.49 per cent, stoking the fire of an already heated rate war.

It’s the lowest posted mortgage rate in Canadian history.

"With this mortgage offering, we will be helping Ontarians to pay off their mortgages sooner while saving money in interest costs,” Bill Whyte, chief member services officer for Meridian said in an official release.  “This is just another example of Meridian having our Members’ backs."

Credit unions have been earning a growing chunk of market share.

“For all current mortgages on homes that were purchased during 2014 up to the time of the survey, 61 per cent were obtained from a bank,” CAAMP’s fall report states. “Mortgage brokers had a 31 per cent share. Credit unions were the source for six per cent of these mortgages, followed by two per cent from life insurance or trust companies.”

Of course, many credit unions deal within the broker channel.

Currently, Meridian’s lowest five-year fixed rate is 2.75 per cent.

“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.” 
  • Ron Butler on 2015-04-10 12:03:45 PM

    Not surprised by that decision.

  • @kiltedbroker on 2015-04-10 12:16:45 PM

    Hat Tip to the Meridian CU, this is a really smart play. Secure new clients now for 18 months at a really low rate and wait on the renewal to make the profit. What % of new clients do you figure they will retain at renewal? 75%-85%. Well played.

    It's too bad a mono-line didn't come up with this idea first. And it's too bad that likely none will follow suit.

  • Cat on 2015-04-10 12:47:19 PM

    So why are we still, I dunno...last 10 + years, only capturing 30% of mortgage originations? Oh I know...yeah. This is why. Nice. Brokers should not be happy about this move to shut us out. They are clearly cherry picking rate products to offer us. Also; is this not what was happening in the US before 2008? Bait and switch? I know they are suggesting the qualification is lean but who is being the judge of that?

  • Jesse D on 2015-04-10 12:55:52 PM

    Agree with Tilted Kilt...tip of the hat to Meridian for trying this. Hopefully, it won't bite the client's in the a$% in 18mo when they get a considerably higher rate.
    So, we stop sending Meridian biz until they enable us to provide that rate. We're at 30% because all the banks bash us every chance they get, CAAMP and IMBA, etc do NOTHING to promote mortgage brokerages, like FSCO they just take our $...unlike in real estate where I consistently see commercials recommending using a realtor.

  • carmen A on 2015-04-10 1:03:47 PM

    I agree with Jesse Cut them off and warn clients that they may be in trouble when the 18 months is up Rates will go up.

  • Aaron Vaillancourt on 2015-04-10 1:57:13 PM

    Keep in mind, retention rates tend to be higher for non broker-originated business so keeping distribution away from our channel is key.

    This is further evidence that brokers are price-takers, not price-setters, despite how advertised buy-downs usually position us. This is because we've utterly failed to collectively set terms for the lenders we partner with.

    There is no doubt about the value good and consistent advice provides - but unless we normalize and enforce a commission structure that various lenders provide us, the unbiased fiduciary value of our professional advice will suffer. This likely won't happen because aligning broker sentiment and behaviour is worse than herding cats.

    And so, the fee-only model is coming, as it should. Meridan would be happy to place these terms through the brokerage channel if the broker was the one charging a fee.

  • @kiltedbroker on 2015-04-10 2:05:04 PM

    Cat. You are right... there seems to be very little product innovation in the broker space that gives brokers a real competitive edge marketing wise. I'm not sure anyone is happy about the move by Meridian, but you can appreciate it for being a clever marketing play.

    Carmen A. If Meridian's current 5 yr fixed rate is 2.75%, that seems pretty competitive now. I'm not so sure that they will be taking advantage of clients on renewal but we will see.

    I guess all we can do is measure the spread now between Meridian and other institutions and look back in 18 months to see if they have increased their rates comparative to the market. This would make a nice blog post or media article down the road.

    Aaron Vaillancourt. Great comment. I'm not sure the fee-only model will actually come, but your comments about normalizing a commission structure is right on the money.

  • Scott on 2015-04-10 7:20:06 PM

    This move by Meridian really serves as further fuel to the buy-down business most of us find ourselves in. Frankly, the monolines are offering fantastic rates - but with really restrictive policies - so were setting ourselves up with not retaining a client upon renewal on some cases.

    This was followed after CIBC offered the 1.99% -6 month offer. Looks like the credit unions and the banks are competing amongst themselves. As brokers, our ability to tailor suit restrictive products to customers that the product would be best for - and to explain the inherent risk - helps set us apart as professionals.

  • John Greenlee on 2015-04-12 2:13:14 PM

    To counter this offer one simply has to do some math for the client - similar to the CIBC 2.69% APR offer. You have to expect rates will go up from today's rates in 18 months. Given that, even a slight increase could negate any savings someone would realize if they were in a 5 year fixed starting today.

    Keep in mind that on insured deals for sure, these 1.49% deals are qualifying at MQR.

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