“I don’t think it will spark a rate war mostly because you can already do better than that with most lenders; monolines (and) credit unions are already down into the 3.3 per cent (range),” Brad Compton of Invis YourLowMortgage.ca told MortgageBrokerNews.ca. “It’s really just a marketing ploy on RBC’s part to get people in the door, but it really pays for the consumer to be educated and to do a bit of research on rates and they’ll see that even 3.69 per cent is not a great rate right now.”
RBC cut its two-, three-,four- and five-year fixed rates by 10 basis points each over the weekend, with its site now boasting those reductions. Compton, however, is trying to quell fears that a rate war similar to the one sparked by BMO in 2012 is on the horizon.
“When BMO did it they were leading the market; they were the first to drop below 3 per cent; whether bank, monoline or credit union no one had really gone that low yet,” Compton explained. “BMO was kind of the trailblazer, but in this case any mortgage broker out there could have been offering something in the 3.3, 3.4 range for the last few weeks now.
“So it’s really RBC playing catch up to what the competitors are doing.”
Indeed, and it is certainly the sort of buzz that any informed client will see right through.
“The banks get a lot of attention, obviously, because they have big marketing and PR budgets so they can make a big announcement and everyone will think ‘great, RBC has dropped its rates,’ but if they had checked with a mortgage broker they would have known two or three weeks ago that you could have gotten a rate much better than what any bank was offering,” Compton said. “And, to be fair, I bet they could have walked into a bank branch over the last week or so and haggled them down to below 3.69 per cent.”
Fears that RBC’s latest move to whittle down its fixed rates will set off the kind of rate war BMO did in 2012 are largely unfounded, argues one broker, suggesting this latest cut is a “marketing ploy.”