At least two big banks are finally taking a page out of the broker playbook and focusing on product features instead of rate.
“Most people who have a rate special seem to have it on a particular term or a particular product,” David Stafford, Scotiabank’s vice-president of home financing solutions told the Globe and Mail Monday. “We’ve found when we’ve done it in the past, it tends to cause a rush to a particular term. What we’re really trying to do is encourage our customers to have a fulsome discussion about what their needs are.”
It’s a different tactic than the one used by several of its competitors following the Bank of Canada’s most recent rate cut.
Earlier this month, CIBC kicked off a rate-cut fracas by offering a promotional 1.99 per cent four-year fixed for the first nine months before raising it to 2.83 per cent.
The Bank of Montreal made headlines in mid-March when it slashed its five-year fixed-rate mortgage to 2.79 per cent from its previous mark of 2.99 per cent.
TD Bank quickly followed suit.
BMO, of course, is famous for drawing the ire of regulators with its aggressive mortgage rate promotions, doing so on several occasions in previous years.
But at least one big bank executive views this sort of rate war as a race to the bottom.
“Last year, I recall one of our competitors launched a rate and literally the next day in the same newspaper another competitor launched a rate one basis point lower. The next day another competitor launched another basis point lower,” Sean Amato-Gauci, SVP of Home Equity Finance for RBC told the Globe. “Is that truly differentiated advertising? Is it advertising that is going to drive more customers to you? In our experience, we’ve found that it doesn’t.”
RBC, however, is currently offering a promotion of its own
with its “employee pricing” rates.