Canadian banking head David McKay explained RBC’s recent rate moves to the Globe:
“The rates coming down were in response to a very aggressive move by a competitor (BMO) and a need for us to defend our client base, and to defend our business. We didn’t lead it there, but we felt compelled to follow.”
“When that market attacker corrected and raised their rates, it enabled us to say funding costs are going up, we’re not making enough spread at this rate … and we need to raise pricing because the cost of funds is going up.”
RBC certainly doesn’t need to justify its rate strategy, but it’s amusing to hear it refer to BMO like a viking marauder. BMO’s getting quite a scrappy little reputation.
Rob McLister, CMT
Visited 6 times, 1 visit(s) today
Last modified: April 29, 2014
I wonder how many people are like me and got a rate hold on the BMO 2.99 waiting for their RBC mortgage to expire? Sorry Mr. McKay but you may have raised rates too early to prevent me from going to the “attacker”. I hope I’m not alone.
LOL! I saw that yesterday. He must’ve been quite bitter about that promo.
I have sat at dinner and had drinks with the Canadian Division bosses of a couple of the Big 5 banks and I can assure you that based on their tone of voice, body language and every other “tell” you could possibly list that the one thing all these guys (and they are all guys) share is relentless competitiveness. When it comes to their direct Big 5 counterparts they really are like Viking marauders.
They could care less about mortgage brokers, we are way below their radar; but with each other, they will fight to the last man standing.
Vikings isn’t the word, more like cannibals.
Dick Fuld Lehman CEO http://www.youtube.com/watch?v=x93EHs627GI
LOL. I bet that guy could negotiate a good rate on his mortgage…if he had one.
You are not alone :-)
Competition is the key.
RBC have lost many customers.
They shouldn’t take their customers as granted.
You should provide proof when making idiotic statements like this… they are the #1 Bank in Canada and have the largest mortgage portfolio. This is not changing anytime soon, if ever.
Too bad most of their Mortgage Specialists can only sell mortgages based on rate, and not on sound advice and market knowledge. They have no idea what is going on in the “real” world.
So why is it that the States have mortgages that lock in for the full term of the mortgage, while Canada has much shorter term mortgages?
RIM and Nokia also were #1 . Look now. Things change as people get informed.
Let me guess … The BANKS make more money that way probably.
Look at the difference in minimum balance a TD customer has to maintain on a checking account have the account fee waived in the US and Canada. It is like $100 in the US and $1000 in Canada.
We do not have healthy competition in the banking industry. After a brief price “war” circus the banks retreat to protect their profits. And the RBC’s head does not hide it.
Any decent mortgage broker
can offer at least
3 better alternatives
then BMOs 5yr 2.99%
One of my clients got
a 5yr 2.99% with 30year
amortization and full pre payment
options with potential much
lower penalty if paid in full
comparing to standard bank penalties.
why would you want to lock in 25 years? Most home owners in Canada refinance or change their terms every 2.5 years. As well, you may need the equity and the penalty could be enormously high.
canadian mortgage expert
Do you have a source for that statistic about people changing mortgages every 2.5 years? I have been trying to find similar data with no luck. Thanks.