Brokers weren't impressed by BMO's 2.99 per cent on its 5-year no-friller, says Centum's Paul Therien, but the offer has highlighted the need to provide clients both rate and expertise.
Video transcript below:
Reporter: The battle of the rates continues as BMO slashes their rate, the Federal government is issuing a warning that lowering rates too fast, too quickly will land Canada’s housing market in hot water. But do brokers agree? We find out in this week’s Big Story on Mortgage Broker News.
With the spring home buying spree around the corner, banks are capitalising on the opportunity to provide low rates to consumers. BMO is the latest to offer cuts, dropping the price on its no friller 5 year fixed rate offering at 2.99%. But is offering the lowest rate a sure fire way to win business or[ is it wise to] drive rates to the bottom?
I think that Bank [Montreal] are offering this low rate absolutely affords the mortgage broker an opportunity to capitalise on it to draw the customer in. Mortgage brokers have had lower rates available for several weeks, some as low as 2.79, 2.74, the challenge becomes that the mortgage broker has to start just focusing on rate. You use the rate to bring the customer in, but just because you have a rate of 2.79 on a product doesn’t necessarily mean that that is the best product for the consumer and mortgage brokers have in my opinion a fiduciary duty to ensure that they are consulting with their clients with respect to their financial goals, ensuring that they have clear financial literacy and then presenting products that support the customer’s financial needs.