Last week, First National rolled out a 3.79% 5-year fixed offer called “Option 60.”
It’s a fairly decent rate for a nationally-available full-featured mortgage that includes a:
- 60-day rate hold [Most competing full-featured mortgages at this rate have only a 30- or 45-day hold.]
- 15% lump-sum prepayment privilege
- 15% payment increase option
- Double-up payment option
- Online account portal that’s among the best in the industry
- One-year home warranty plan [restrictions apply; N/A in BC]
- A "reasonable" IRD penalty based on discounted rates and not posted rates [like the major banks]
The Option 60 is available on both high- and low-ratio mortgages (as long as the mortgage meets CMHC guidelines).
First National offers this rate and product to all of its brokers with no status hurdles to meet. Other things being equal, lenders that provide good rates and service to all brokers without volume minimums deserve some extra support.
First National is Canada’s largest non-bank lender, and the third biggest lender in the broker channel (as of Filogix’s Q3 report).
Rob McLister, CMT
Last modified: April 25, 2014
Not sure I am a fan of the following with this product.
• Any increase to the existing mortgage will require a payout penalty as outlined above
• Blended rate to maturity is not available
Not sure I am a fan of the following with this product.
• Any increase to the existing mortgage will require a payout penalty as outlined above
• Blended rate to maturity is not available
Not sure I am a fan of the following with this product.
• Any increase to the existing mortgage will require a payout penalty as outlined above
• Blended rate to maturity is not available
RBC has 3.74 60 Day Rate hold, with online banking available as well. Fully featured, no restrictions. Available coast to coast.
Ya right. RBC’s website says 4.14%.
http://www.rbcroyalbank.com/products/mortgages/view_rates.html
RBC can’t compete in features either.
It only has 10% prepayments.
You can only make ONE prepayment a year!!!
You can only increase your monthly payments
10% a year.
RBC doesn’t include any home warranty.
Hi Nolan, I’m with you on those points…
GTA, let’s just say that websites don’t always have the complete information. Click on the RBC link here and ask the rep listed. I did, and he was a great help, got my approval on the 17th of January. Got an update from him this morning letting me know my rate will be 3.69% after the rate change that happened recently, so saved another .10. For that matter, ask any of thier reps. You can also use their double up to a 100% of your payment payment option as well more than once a year, so if you are quoting from the website, how about you quote everything, not only the parts that support your opinion. Let’s see, I have a $400,000 mortgage, with the ability to pre pay $40,000 PER YEAR(10%) vs $60,000 (15%). Seeing how I probably won’t use all of my $40,000 annually, I think 10% is more than enough. Don’t get caught up in the 10% vs 15% fight, convert it into real numbers. I used to do the same thing you did and say 15% is much better than 10%, then I realized what it meant in actual dollars. I can use the 10% monthly increase PLUS the double up option, looks like I have lots of flexibility. Maybe I am not as rich as you, and you need the extra $20,000 per year. Congrats to you. Most of us don’t.
If you want to give your client to RBC go right ahead… Good luck getting the client back. I would rather go with a non-bank lender like First National etc.
This new product with First National seems to be a good product with few restrictions. Keep in mind that it is our responsibility to do our jobs by providing sound advice to clients and ensuring that this is the right product for their specific needs. Its nice to see a company coming out with some different product offerings in times when the government is imposing further regulations.
I agree with your point, I am merely saying that this product isn’t that innovative, it is more of a move to play catch up with some of the bigger players in the market place.
I called RBC and the agent on the phone quoted 4.14%. She said I could talk to a mortgage specialist who “might” be able to do better. I’d rather not play those games and will probably use a broker.
It’s also annoying to have a restriction on making large prepayments more than once per year. I get semi-annual bonuses and it is costly to have to wait until the next year to plop down a big chunk on my mortgage.
You called the call centre, and not a mortgage specialist. First error. I can guarantee you that the going rate today is 3.69%.
All I am saying is that it worked for me, and I’m happy with the results.Just my opinion.
FYI My mortgage was with Firstline before I transferred it, so I have dealt with brokers in the past and had good experiences, just decided to look around myself this time.
Arby,
The fact he called the call center first is not an error. Why should he run around to all these mortgage “specialists” to get a great rate?
People shouldn’t have to run around to get a great rate. If the bank appreciates them as a customer, it should offer all customers fully discounted rates when they first contact the bank. Most bank clients pay some kind of banking fees so I don’t see why people have to put up with any hassles securing the best rate.
The issue here is profit: the banks’ discretionary pricing model is highly profitable for them but it can also be quite frustrating for consumers looking to get a good deal. Forget taking the time looking at the rates of different brokerages — now they have to search with different agents working for the same institution!
It’s true that the prepayments comparison is somewhat of a non-issue unless the individual is truly dedicated to prepaying the mortgage aggressively. There’s no point in having a large prepayment facility if the homeowner never ends up using it.
Thomas: it’s a mistake to think that lenders who work only with brokers don’t have their own internal retentions department which can “steal” your clients with an early renewal or discretionary pricing. If you keep steady contact with your clients throughout the term, including contacting them at least 6 months before maturity (which is when some lenders send out their early renewal offers), odds are, if you’re doing your job right, your client will trust you and insist on working with you. The whole point here is developing relationships. Retention departments would also back off the deal if they see that you plan on keeping the mortgage in-house. But again, you’ll be facing competition whether you send a deal to a major bank or a lender that works exclusively with brokers. It’s part of the business.
I think that in recent years, the banks have gained market share at the expense of brokers because 80% of mortgage brokers out there (a figure that many BDMs I’ve met concur with) don’t keep in touch regularly with clients. When there’s an extended period of disconnect, it makes it quite easy for the banks to move in considering that 99.9% of Canadians have an account with a major bank. This provides the banks’ own sales force team with access to a massive database which they will capitalize on to secure more business. As some major banks also work with brokers (Scotia, TD), they’ve increasingly exploited this mindset by getting brokers to find and bring clients in. Once the client is through the door, the banks would compete aggressively on renewal and you’ll be out in the cold. But again, dealing with broker only lenders will not remedy this. They too will try their utmost to keep the client with them.