No such thing as 'employee pricing' mortgages?

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The Royal Bank of Canada (RBC) made headlines Tuesday with its “employee pricing" mortgage offering but brokers are far from convinced that such a product exists.

“Personally I think it’s marketing because I have done mortgages for RBC employees in the past,” David Skinner, a Nova Scotia-based broker with TMG The Mortgage Group told MortgageBrokerNews.ca. “One of the RBC (employees) got in trouble for giving my card to clients as a referral.”

Being billed as the same rates offered to employees and drawing similarities to employee-priced car offerings that dealers often offer, RBC’s move is being viewed as a strategic play in the increasingly hot mortgage wars.

It’s also a first for any bank, according to an RBC rep.

“This is a first for RBC, and a first for the big banks,” Sean Amato-Gauci, senior vice-president of home equity financing at RBC told the Financial Post. “Home buying season is competitive and cluttered, and it’s not just rates that get you noticed.”

Regardless, brokers took to the MortgageBrokerNews.ca comments section to discuss the merits of the offering offering.

“This is a very simple promotion: 2.99 per cent five year and 2.79 per cent Four Year,” Ron Butler of Verico Butler Mortgage wrote. “Regular (all the frills) RBC product with a 120 hold for purchases; a better product than the BMO offering which has expired. In many ways a quite competitive quality offering.”

One anonymous Royal Bank employee even joined the fracas to dispel some of the misconceptions.

“There are no negative tax implications related to this offering at this time for employees,” the commenter wrote. “As Ron Butler indicated, this offering is far superior than that of BMO, and the rates are very competitive (if not better) to those rates in the broker market (save for "bought down" specials).”
 
 Related:

RBC offers ‘employee pricing’ mortgages



 
  • KJL on 2014-05-07 11:55:31 AM

    Ahhhh - another sales ploy ! There is no such thing as "employee pricing". All they are doing is trying to grab a piece of the pie and keep up with the Jones' ! RBC is right next to my office and they had no idea of any diff in pricing! Hell these people normally send clients here for best rate , then they match ! same poop folks - different color !

  • victor on 2014-05-07 12:42:23 PM

    Sure there is such a thing as employee priced mortgages. It doesn't charge its employees any special rate and it doesn't give the public any special rate so it is charging the public the same as it charges its employees. Not a good deal, but not a lie either.

  • Lisa on 2014-05-07 12:50:41 PM

    So does everyone have to pay taxable benefits on employee pricing? When you get an employee mortgage or loan as staff it's a taxable benefit....

  • John Van Driel on 2014-05-07 3:03:17 PM

    We give our people "employee pricing" at the Mortgage Shopper as well, and the banks can't touch it!!

  • Paolo Di Petta | dipettamortgage.com on 2014-05-07 3:14:18 PM

    Is anyone really surprised the banks are using the same tactics as used car salesmen? If it walks like a duck, and quacks like a duck...

    If we had an industry group worth a damn, they would have pounced on this on our behalf: "Mortgage Brokers - We don't need to tease with employee rates, because our rates are competitive ALL THE TIME!"

    Another missed CAAMP opportunity to actually support the Broker community that they bleed dry... oh wait, I forgot, the banks are members too...

  • Past employee on 2014-05-07 7:00:41 PM

    The question that needs to be asked, is which employee's pricing are you getting. Different levels of employees get different rate discounts. VP's and senior management get better rates ( and a different structure, sometimes 2 tier) then front end staff.

  • Lee Perry on 2014-05-07 7:10:39 PM

    As for the tax implication on employee mortgages and if memory serves me correct I can say as a former bank employee (not RBC) there were options. 1. use the internal process through HR and receive up to 135 basis points off bank posted without it being a taxable benefit. 2. deal directly with a branch and get as much discount as they would grant with no tax implication. 3. Give my deal to a broker and let them negotiate on my behalf. Not sure if policy has changed at the bank over the last 8 years, or with CRA, but with discounting at 200 bps off posted today it may be wise for bank employees to choose option 3 and look to brokers as an avenue to explore as a safeguard against any tax implications. Don't forget the more discount off posted initially granted also means a stiffer penalty generally with banks should the deal need to be renegotiated before maturity.

  • Lee Perry on 2014-05-07 7:12:01 PM

    As for the tax implication on employee mortgages and if memory serves me correct I can say as a former bank employee (not RBC) there were options. 1. use the internal process through HR and receive up to 135 basis points off bank posted without it being a taxable benefit. 2. deal directly with a branch and get as much discount as they would grant with no tax implication. 3. Give my deal to a broker and let them negotiate on my behalf. Not sure if policy has changed at the bank over the last 8 years, or with CRA, but with discounting at 200 bps off posted today it may be wise for bank employees to choose option 3 and look to brokers as an avenue to explore as a safeguard against any tax implications. Don't forget the more discount off posted initially granted also means a stiffer penalty generally with banks should the deal need to be renegotiated before maturity.

  • Ron Butler on 2014-05-07 7:34:29 PM

    Good Lord, it's just an advertising hook, same approach that GM and Ford take. Just wording to create buzz and it works.

    Heavens to Betsy, why can't we just act like business people and say: "yeah, good marketing gimmick" why do always have to whine and moan and parse the thing to death.

    Folks, RBC are great competitors but we are hugely competitive too. We have better rates, we have more choice, we give great service.

    Acknowledge the volley into our court and RALLY BACK, My radio ads next week will do just that.

  • Victor Simone on 2014-05-08 11:22:20 AM

    "Employee mortgage pricing" can be taxable or non-taxable depending on various factors.

    Any mortgage buzz the banks can provide the market is good for all mortgage channels. Since the independent broker channel can match or beat certain rates, it's no trouble at all.

  • BJD on 2014-05-08 6:57:53 PM

    I agree with Ron's comments..It is just a marketing ploy and the more attention we give to it, the more successful it will be..2.99% is out there already and as been for some time and with some lenders we can get even get better...Also, lets give our clients a little more credit to know what is going on here..Building and maintaining a strong relationship with your clients will always work to your benefit and fair you well. Cheers!

  • @mortgagepro10 on 2014-05-13 7:01:28 PM

    It's true. These promotions banks roll out are becoming more and more car salesy all the time. "As low as XXX Bi-weekly", "$500 cash back", "Employee pricing".

    RBC execs got exactly what they are looking for out of the promo -- attention and buzz. Now as brokers, it's your job to take the time to articulate to clients the VALUE IN YOUR SERVICE rather than panic and lower pants because of the rate. We should be good at that by now no? If not, perhaps time to board up the doors!

  • Ron Butler on 2014-05-13 7:12:26 PM

    @mortgagepro10, today Investors Group (who are a very small player in the mortgage space) announced 1.99% Three Year Variable.

    Please understand Jurassic Mortgage world is starting to fade. Modern marketing, consumer buzz and Value , Value , Value to the consumer, that's the future

    Fridge magnets and CRM systems are a faint hope.

    Better start loosening that belt, the pants may be dropping.

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