The Toronto Sun reports that on October 12, 2010 both TD Canada Trust and the Bank of Montreal decreased their benchmark mortgage rates. These new rates for a five year fixed rate are now as low as 3.49%.
“Banks typically fund their fixed-rate mortgage lending from instruments tied to bond yields. The ongoing rally in the fixed-income market has meant they are able to continue to offer lower rates, even though the Bank of Canada has raised its prime rate twice since June.”
What does this mean for independent mortgage brokers? Well, competition will be slightly heightened. People, who actually do their homework and are reading about these stories, will go back to their mortgage broker and ask for a better rate. In turn, the mortgage broker will have to choose between cutting a slight portion of their commissionable amount, and losing a customer. For some mortgage brokers this will be no big deal, especially if they are quick at closing deals. However, for others cutting their costs could steer them into the ground faster than expected.
As a customer, just ensure to ask around about mortgage rates and get the best that you can. For the mortgage broker, be prepared for customers wanting a lower mortgage rate, or risk losing them to TD Canada Trust or Bank of Montreal.
