BMO’s posted 5-year-fixed rate of 2.99 is nothing new, says True North’s CEO Dan Eisner; still other major lenders will be quick to follow suit despite warnings from federal finance minister Jim Flaherty of a potential rate war.
“Flaherty is very conservative by nature. But we’re not a communist country yet; the banks are still allowed to make their own decisions. In the end, market forces will drive this,” he told MortgageBrokerNews.ca.
Eisner does admit that the lower rate is great news
for True North and brokers in general, but it isn’t the big splash that BMO’s 2.99 announcement was back in January of 2012.
“This time around, it’s nothing special,” he says, pointing to a large cross-section of the industry that has been offering a similar or even lower rate. “If they could offer it at 2.79, that would be news!
“Fundamentally, the BMO rate is not that special. There are a lot of similar or better rates out there right now. And anyway, the posted rate isn’t the true rate being offered at the banks,” Eisner points out. “Rates are being set by consumers using the rate websites, not the banks anymore.”
Mortgage rate websites, like RateSupermarket.ca and RateHub.ca, are what is driving the market, argues Eisner.
“Anyone in the business who thinks that people are going to a bank to get a rate quote for their mortgage is still using fax machines and rotary phones,” he says. “Rate sites and the internet have fundamentally changed the way we do business. In eight seconds you can have the best available rate on your phone in the palm of your hand.”
As of Thursday, the best fixed 5-year term was available from Verico
Butler Mortgage at 2.77 per cent on RateSupermarket, while Dominion Lending Centre, True North and Mortgage Emporium each offered 2.79 per cent on RateHub.