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The Big Story: Fighting 2.99

It might have seemed like the end of the world: A competitor offering an unmatchable 2.99 per cent on a five-year fixed. Brokers were understandably concerned about the pressure it would place on them to match the historic low. In the end, it actually helped drive business for brokers, as some reported a relatively brisk demand from preapproved and new clients.

MortgageBrokerNewsTV recently spoke to mortgage professionals James Robinson of The Mortgage Centre-Mortgage Watch Inc., John Panagakos of Dominion Lending Centres-Home Financial Inc., and David Smith at Oriana Financial to get their analysis Find out on MortgageBrokerNewsTV, your home for the industry’s best news, opinion and analysis.


Video transcript below:

John Tenpenny, Mortgage Brokers News TV
John Tenpenny:  Hi, I’m John Tenpenny, Editor of CMP Magazine and welcome to the Big Story on Mortgage Broker News TV.
For some it might have seemed that the end of the world was near.  An interest rate of 2.99%, what are we going to do?  While other lenders quickly jumped on board, some brokers felt the pressure to match these historically low rates.  In the end it actually drove business for brokers, as some reported a relatively brisk demand from pre-approved and new clients.  It also opened up a dialogue between brokers and home-owners and brokers were able to advise clients and find them the right deal, whether it was for 2.99 or not.
James Robinson, Agent, The Mortgage Centre, Mortgage Watch Inc.
James Robinson:  So when the news first came out about this 2.99 five year rate, we were all a little back on our heels and said, Oh my God we are out of business.  And then we started to realise that all press is good press and this hit the news big time and it got our phones ringing and quite frankly the lender that offered that had about a 48 hour window before other lenders started to snap up and follow their lead and compete.  So we got our customers calling us and asking about this rate and we were able to then take them to the next step and say okay, well that’s a great rate, we can get you that rate and let’s talk actually about what your needs are and what the best and most suitable product is for what you are looking for, rather than what’s the lowest rate which is as brokers, what do we do?
John Panagakos, Principal Broker, Dominion Lending Centres, Home Financial Inc.
John Panagakos:  When I heard the 2.99 rate I just, right away I thought Oh my God.  Then I said Oh my God, great!  Because this is good news for everyone, right.  The Canadian customer has the lowest rate ever in [sent in] history when buying a house.  They caused a tremendous flurry of activity all over the marketplace and for me it was amazing and for mortgage brokers it was amazing because my phone hasn’t stopped ringing from the minute that started.  It caused a lot of conversations, you know pros and cons and at the end of the day, I think it was a win-win for everybody.
David Smith, Broker / Partner, Oriana Financial
David Smith:  Well initially it really sort of rocked my world that somebody who wasn’t supporting mortgage brokers was offering a rate that we couldn’t match.  On closer examination though it opened up a dialogue with our clients around the restrictive conditions and terms of that mortgage, which allowed us to then segway into selling four years at 2.95 for example, which a couple of lenders had or buying down a rate with another lender to 2.99 to match it.  Both of those were possibilities and provided better financing for clients, then the 2.99 at BMO.  So the overall effect I think was positive in terms of our relationships with our clients in that we could offer great advice, offer the same price and provide better service.