Spring mortgage wars start early, as member-owned lender makes new low offer to homebuyers
Meridian credit union just offered a one-year mortgage at 1.69 per cent. (Daniel Munoz/Reuters)
“As we are quickly approaching the busy spring home buying season, this is the perfect time for people to evaluate their home buying options by getting a pre-approval now,” the credit union said in a release Tuesday announcing the offer.
The deal is the lowest mortgage rate currently on offer from any lenders, for any term, listed on RateSupermarket.ca. It also comes with a so-called 20/20 prepayment ability, which means the borrower is able to pay off 20 per cent of the principal in any given year. The borrower can also increase the monthly payment up to 20 per cent of the original payment plan each year.
Competitive market
The move is a first strike in the battle for market share in the upcoming spring buying season. The big banks have raised their mortgage rates incrementally over the past 12 months in some cases, even as the Bank of Canada has twice slashed its benchmark rate, and yields in the bond market — where the banks borrow from to get money to loan out to mortgage buyers — are also getting cheaper.
In recent years, mortgage lenders have been keen to cut their rates in the lead-up to the busy spring buying season in order to gain market share.
- March 2014: BMO slashes 5-year mortgage rate to under 3%
- March 2015: BMO, TD cut mortgage rate to record low 2.79%
Meridian’s announcement came with a potshot against the big banks, who haven’t passed on the full extent of the last two central bank rate cuts to consumers by lowering their consumer rates by the same amount.
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