Is the Mortgage War Heating up between the banks?

The race to offer the country’s lowest mortgage rate and to win your mortgage business has some lenders looking beyond the numbers. While some of the major banks are already offering special deals on mortgages, some of the others are already looking to shift the focus away from these rate specials to features. With the critical spring housing market in full swing, Bank of Montreal, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce are all offering rate specials that are among the lowest ever advertised. But RBC, the country’s largest mortgage lender, is looking at an alternative way of attracting your mortgage business by launching a campaign that is more familiar to you from the car sales industry. The spring promotion, which runs until July 3, is now offering at 2.69 per cent, which is RBC'S current employee rate for a five-year fixed mortgage would make it the lowest among the rates advertised by any major bank. Another Bank, Bank of Nova Scotia is launching its spring mortgage campaign with a consumer poll showing that while 84 per cent of mortgage shoppers care about the rate they’re getting, a majority also care about other mortgage features, such as the ability to break their mortgage early or make extra payments. The shift in strategy at RBC and Bank of Nova Scotia reflects the new reality of the mortgage business. With interest rates at record lows and banks increasingly battling with credit unions and other non-bank lenders for market share, lenders are having a difficult time standing out from the pack. This year, many industry players complained that BMO’s 2.79-per-cent spring special reflected a rate that most lenders had been quietly offering for months. Today, banks can offer specials that shave only a few basis points off a competitor’s product. Some are now turning their messages toward the other services that only banks can offer, such as attractive rates on deposit accounts and credit cards for consumers who also sign up for a mortgage.

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