Canadian Tire (CT) started selling mortgages three years ago. That foray ended today.
The company is selling its entire mortgage portfolio to National Bank and exiting the business completely.
CT apparently figures it can make more money lending out its $2.1 billion in deposits to credit card holders. (The company is one of the biggest card issuers in Canada).
CFO, Huw Thomas, told FP that: “We had been in pilot [stage] for a period of time with our mortgage business and we looked at the business and the market conditions and decided longer term that the best opportunities resided in our core business and retail banking.”
Current CT mortgage holders will be transitioned to National Bank in “early 2010.” That entails less than 1,000 customers and $167 million in mortgages—not big numbers. The sale price will be “essentially…book value,” said the company.
CT was best known for its One & Only product, an interest offsettingreadvanceable mortgage. The company was also fiercely competitive with interest rates for quite a while. That changed this year when CT refused to lower rates despite improvements in market-wide funding costs. Sources say that was the first clue that “something was up.”
Today’s news leaves just two prominent lenders with interest offsetting mortgages: National Bank and Manulife. (Note to lenders: We could really use another one.)
CT didn’t waste any time after this announcement. Mortgage information has already been removed from their website and replaced with today’s press release.