Manulife continues to do tremendous mortgage business thanks to its Manulife One television and print ads. It also employs a unique model where it pays financial advisors to promote the “One.”
Forget about mortgage brokers. It can’t be bothered and doesn’t want to pay them. Financial advisors are a nice enough little niche –and one that compliments Manulife’s all-out advertising assault.
As a result of the above, Manulife’s lending volume is “growing about C$1 billion a quarter,” says President Paul Rooney.
Essentially, the Manulife One is a mortgage, checking account, savings account, and line of credit all in one. In fact, it’s the most popular brand of “all-in-one” mortgage in Canada (albeit, not necessarily the best–check out National Bank’s and Canadian Tire’s versions).
For the foreseeable future, Manulife will keep selling the Manulife One without face-to-face borrower contact. According to Reuters, Rooney has no interest in the expense of branches and feels Canadians are becoming quite comfortable with Internet banking. We’d agree.
(Quotes via Reuters)
Are thes all in one any good? im wiht RBC on a prime -.9
varible 5 year for 325,000
If only M1 can waive the $15/month fee, I would consider a try
CT one just doesn’t sound too safe
But as a MFC stock holder, good job Manulife, keep up the good work and charge more per month ;p
Obviously the marketing here is paying off. Although it was (is) a revolutionary product, it is certainly not for everyone.
If you are going to carry a large balance for a long period of time, you are better off in a prime minus variable to save on interest costs. Just about all mortgages allow additional payments as well outside of your regular P & I.
In addition to the $15 a month fee, you’ll also get knicked a 1.50 everytime you use a non-exchange atm, and the exchange machines are pretty hard to find (HSBC Bank, National Bank, Neighbourhood Credit Unions, etc.)
I was looking at a client’s M1 statement not too long ago and between atm fees, management fees and (in their case) NSF’s, they were paying almost $100 a month in fees to have it. Plus, they had had it for 3 years and it was at or near the limit the whole time.
Many people don’t have the skill or discipline to be able to make a product like this work for them. In addition, National Bank’s All In One offers everything M1 does plus more for no monthly fee. No marketing though :)
Jerry, compared to the M1, why is Canadian Tire’s not safe?
It’s personal opinion, but I tend to stay with big 5 or well known names if all else being equal
i.e. I find CT one of a newcomer to the market in terms of High Savings, and Mortgage, and I applaud their strong efforts in offering competitive rates and high savings interest, it’s not for me.
But I buy a LOT from Cdn. Tire :)
Matt you have a good deal so keep it. M1 can’t compare because it is at prime. You must have got your mortgage a while ago though. RBC no longer has prime – .90 today.
Here is some info from Manulife you may find interesting.
What has changed? Beginning October 15, 2008, the Canada Mortgage and Housing Corporation (CMHC) will no longer offer high-ratio mortgage insurance for new line-of-credit mortgages, including Manulife One.
What does this mean for Manulife One? As a result of this change, the maximum loan-to-value ratio for Manulife One accounts approved after October 14, 2008 will be 80%. Clients who already have a high-ratio Manulife One account will be unaffected.
What are the options for clients who need a high-ratio mortgage? Going forward, there are a couple of different options I’ll explore with your clients who may need a high-ratio mortgage:
Determine if the clients can achieve 20% equity. If your client has savings they can apply to their debt or has underestimated the appraisal value of their home, they may be able to qualify for a standard Manulife One.
Start them with a Preferred Rate Mortgage. Manulife Bank’s Preferred Rate mortgage allows clients to borrow up to 95% of the value of their home with an amortization period of up to 35 years. With very attractive rates and prepayment privileges, this mortgage is a great way for clients to get started with home ownership. Then, when their term is up and they’ve achieved at least 20% equity in their home, they can make the switch to Manulife One.
As a side note, the high ratio Manulife One is crazy in my mind. Why they had that in the first place I don’t know. Having 20% is not much, but a line of credit!?
regards,
Brian
Hi Brian,
Thanks a bunch for the info. HELOCs across the board will be capped at 80% LTV now unfortunately (if anyone knows of exceptions please let us know!). It’s too bad because the high-ratio versions were good products for the self-employed and other unique situations.
Regarding Manulife’s high ratio products, they’ve got some stiff competitors in that department. I suspect the government’s new amortization rules just cost Manulife millions of dollars over the long-run.
Cheers,
Rob
I was looking at products similar to the M1. I went to Scotia and they recommended getting a 5 yr var open mortgage at Prime – 0.5% with a HELOC at prime. They said I could use this like M1 and use my total bank acct balance to pay down the mortgage and any extra money required for expenses to be borrowed from the HELOC. This would be similar to the One type account arrangement.
Since the mortgage is at Prime – 0.5% isn’t this a cheaper alternative than the One type of accounts which are a prime?
Dan, That’s somewhat true but there are restrictions on Scotia’s product that make the comparison with Manulife a bit tenuous. Give me a call and I can explain. There are other options that might be a better fit if you’re going to be readvancing funds frequently to your line of credit. – Rob
I looked at M1 and didn’t think it made much sense. Can’t people achieve the same thing through disciplined contributions to their mortgage, debt and investments?
Thinking out loud…
It seems like all money put into the account is in fact charged interest. Yes it goes in to immediately lower the balance owing – but your balance then immediately increases once you want to use that money. If I use any of the money put into the M1 account for a major purchase, vacation, day to day expenses or long-term investments would I not be paying interest on it?
Alternatively if I use my free income/cash to cover major purchases, vacations, daily expenses and make contribution to my mortgage and investments I can do so without increasing my debt or interest.
So it’s really opportunity cost of paying mortgage vs other spending/investing decisions. I suppose the first scenario I’m paying the debt down and then withdrawing back up to a higher level. In the second scenario I’m starting higher (by not having my income flow into lower the M1 debt) but my regular contributions get me to the same level (but avoid the service fees).
In the end it seems to be a wash – with the only real difference being daily interest saved with M1 deposits vs fees charged.
Also – Is the interest charged on M1 deductible? If not, would I not be better to pay my mortgage and borrow to invest to benefit from tax deductibility of the investment loan?
If you are constantly increasing your M1 debt with daily/other expenses – at what point is it finally paid off?
What am I missing? Comments appreciated…
I agree with you, I think exactly the same.
Well, one compliant that I have with M1 is that when we bought we were told that the mortgage rate was Manulife prime. And had always been Manulife prime. In the fine print it states that they have the right to set the Manulife base rate at whatever they want. In practice they have not deviated since the inception. Until now, where they are now 0.75% higher than their prime.