True North’s 2.99 per cent offer was in no way a “loss leader,” says the company’s owner, suggesting it’s leading sales in markets where offered.
“We believe in the Walmart philosophy of everyday low prices,” Dan Eisner told MortgageBrokerNews.ca. “We don’t pick and choose who we give the offer to, and it has never meant to be a loss-leader, in fact, it has led sales over the time it’s been available in B.C. and Alberta.”
The brokerage, relying on a heavy Internet presence to drive business to several upscale storefront locations, experienced a rush of traffic in the weeks leading up to the new mortgage rules. The timing makes it harder to gauge just how many of those deals were initiated because of the offer and not the media blitz surrounding the tighter mortgage rules.
Eisner’s comments – meant to address critics of buydowns – follows the company’s announcement last month that it would hawk its own offer of 2.99 on a five-year fixed – becoming what it bills as “the first Canadian mortgage broker to break the 3 per cent threshold."
The full-featured mortgage offer – exclusive to Canada’s two most western provinces – is being funded through Street and First National, with Eisner relying on buydowns to effect it. He isn’t disclosing the exact impact of that reduction on his commission.
But unlike the majority of brokers who use that same sorts of arrangements to protect a deal, or keep a client from going to a competitor, True North has committed to making its 2.99 offer available across the board and to all qualifying clients in B.C. and Alberta.
There’s growing concern among many that the willingness to heavily promote bought-down rates as a rule and not the exception will ultimately devalue brokering in the eyes of consumers.
Eisner argues that his own buydowns still allow him healthy return – one more in keeping with historical remuneration values.
Still, the tighter mortgage rules ushered in this week may ultimately test his resolve to keep the 2.99 offer, said one analyst Thursday, pointing to True North’s focus on volume – something that may be harder to come by in a rapidly cooling market.
Eisner doesn’t necessarily disagree.
“The effect of the mortgage rules does concern me,” he told MortgageBrokerNews.ca.