Brokers may ultimately have to thank RBC for shooting holes in BMO’s 2.99 per cent offer, the biggest of Canada’s big banks running ads critical of the no-frills mortgage.
“What good is a low rate mortgage without the frills?” asks an RBC full-pager running in a national daily. “Switch to RBC Royal Bank and get a 2.99 per cent fixed rate mortgage with all the frills.”
Aside from that last bit – the plug for RBC’s four-year fixed – the message amphifies the one mortgage brokers have struggled to get out to consumers.
They’ve used it to retain clients looking for BMO`s same rock-bottom rate, but unaware of the even lower prepayment privileges and the restrictive 25-year amortization.
Brokers, and RBC, have actively tried to draw distinctions between their own full-featured four-year fixed offerings, also at 2.99 per cent, and BMO’s stripped-down version at five.
The RBC ads are likely to help bring home that point for broker clients, even as it helps the bank seize on the originations opportunities stemming from BMO’s reintroduction of its limited-time offer.
Last week, the bank trod out the rate, in effect until March 28, as a re-launch of the same no-frills options introduced to the market in January.
Industry criticism of those restrictions aside, said BMO’s head of Canadian retail operations, no lender matched its five-year term in January and none of the big banks have moved to do it this time around.
“They matched us on the rate, but on a four-year term,” Frank Techar told reporters last Wednesday. “We offered one more year of protection against rising rates. To be really clear, none of them matched us back in January.”
Even before RBC’s ads, some brokers moved to garner media attention for their own efforts to counter the BMO offer.
Mark Norman, a broker with VERICO ACME Mortgage Professionals, is now offering $299 to any clients who bring their BMO offers into his office, allowing him the opportunity to arrange another mortgage focused on bettering their saving.
In fact, “if I can't, I will pay them $299 in cash and they can go back to BMO with my money in their hand and get their mortgage there," he said. “We’re going straight to the client, and challenging the idea that the way to save money is only on rate.”
The offer has ignited broker support, not only in Norman’s Newfoundland market, but across the country.