March 29th, 2012 is going to be remembered as the day when the BIG SIX Banks ended their Mortgage War. Well, at least for now. Rates are up around 0.50% at Retail Branches of the BIG SIX Banks. (don’t worry, Mortgage Broker rates haven’t gone up that much and are lower than any of the so-called discounted or special rates advertised by the BIG SIX Banks.)
In what was an unprecedented, public fight for your mortgage, the BIG SIX Banks pulled down their pants and showed how low they can really go with their rates. We saw BMO come out with their 2.99% NO FRILLS mortgage… ( a product we wouldn’t recommend to anyone due to it’s restrictions, limitations and penalty calculations). Unfortunately, too many borrowers don’t look beyond the rate and have signed on for this product.. They will have to deal with the consequences in the years to come.
RBC fired back with a pretty good rate of 2.99% for 4 years… It didn’t have the restrictions or limitations but it still had that unfair penalty calculation. RBC also took some public shots at the BMO product, through the media and their own website. It was great to see some real competition take place among our BIG BANKS. There is always a winner in this war. You the borrower.
TD, Scotiabank, National Bank and CIBC all followed with a similar 4 year fixed rate at 2.99%. But they still had that same penalty calculation formula I absolutely don’t like.
“Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers.” Anyone remember that quote? That’s a direct quote from the Bank of Canada review entitled ‘Competition in the Canadian Mortgage Market’.
Here’s another one from the same report “borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly”.
The good news about all this rate war stuff is that we saw even better mortgage products being offered through the Mortgage Broker channel. Remember these quotes the next time you are shopping for a mortgage.