Meridian Hits the Magic Number: 2.99%

label isolated on white backgroundUnlike the banks, Meridian Credit Union doesn’t worry about calls from the Department of Finance urging it to price 5-year mortgages above 3.00%. It’s a good thing it doesn’t because the company, Ontario’s largest credit union, has rolled out a new 2.99% five-year fixed mortgage.

On an advertised basis, it’s the lowest 5-year fixed rate of any lender in the country, according to CMT’s sister site The mortgage comes with a 45-day rate hold and all the bells and whistles, including a 20% annual prepayment privilege, portability (within the province), bridge financing, optional skip-a-payment, etc.

“We wanted to get out there early (in advance of the spring market),” said Bill Whyte, Chief Member Services Officer at Meridian.

“Meridian wants to compete with the banks and give Ontario homeowners some choice. In this case, we had an opportunity to give people a great rate.”

That “opportunity” is in reference to Meridian’s enviable liquidity position at the moment. The company securitizes some of its mortgages, but the majority of funding for this special rate comes from deposits. “We had a very successful fall campaign in raising deposits so we want to put that money to work.”

The company’s 2.99% promotion is only good in Ontario and has no official deadline. How long it lasts “depends on external market factors” like the bond market, states Whyte. (Fixed mortgage rates track bond yields.)

The offer is available only through Meridian’s retail branches and its mobile mortgage specialists.

Will other lenders match Meridian? “I’m not sure they won’t,” he says. The spring market is typically when lenders pull out all the stops to be competitive.

Factoid: In 2013, Meridian Credit Union was ranked with the best online service of any Canadian credit union, according to a year-long mystery shopping program conducted by research firm Surviscor.

Rob McLister, CMT  (email)

  1. It’s worth noting that they’re not offering this rate to brokers, only at the branch level. While I love some of the niche’s Meridian serves, they undercut the broker at the branch level over and over again. Very frustrating (and honestly, I use them less because they do this…).

  2. Sounds like things are looking up for the spring market… the Province of BC just upped the land transfer tax exemption ceiling for first me buyers from $425k to $475k (full info listed on the Province of BC website).
    Now for BC lenders to drop rates a bit and the flood gates to open!
    Good luck to all Mortgage Pro’s and home buyers,

  3. Hi Tim,
    Your frustration will be widely shared amongst Ontario brokers. Meridian isn’t the only channel lender that runs retail-only promotions, but the high-profile nature of this one makes Meridian’s decision more visible. Hopefully the company’s management considers offering future specials through brokers even if at significantly reduced comp. That said, none of us truly know the economics and strategy behind this move so it’s hard to say what’s in Meridian’s best interest. Sometimes, for example, a deposit-taking lender has only so much funding to go around and it doesn’t make sense to open the broker taps. Regardless, this decision may damage their relationship with some brokers to some degree, and they had to know that it would.

  4. It hasn’t happened yet (Meridian getting a call from Flaherty) but I wouldn’t rule it out. The Harper government is all about smothering control of everything that happens in Canada. It’s comical that so many people voted for Harper in the belief that he would be hands off and he has interfered everywhere. Bullying lenders about their rates and programs. Bullying unions not to strike. Neutering Stats Can so they can’t inform Canadians on economic conditions. Introducing a new law that will completely muzzle Elections Canada and allow Harper to steal the next election. I would think that the vast majority of the people in the mortgage industry voted Harper. Have gotten what you expected ? Hmmm ?

  5. @ Dave… Credit Unions are regulated by the Province. The federal Finance Minister can call as often as he wants. It’s a dial tone.

  6. I heard about this rate special earlier this week. I happen to live in the heart of Meridian country(5 branches within 15 min) and have been a big supporter for them in our marketplace. This is about the 3 or 4th time they have done this. Brokers voiced their concerns before and I was told they learned their lesson and wouldn’t undercut brokers again. Obviously they forgot what they said. As a mortgage agent I take great offense to this strategy.So Rob if they only have so much to spread around, well they shouldn’t be advertising it or promoting it then publicly, keep it at the branch level for leverage. 3 years ago when I starting promoting Meridian they were not that well known in my market. So what bothers me is the brokers are great to get their message out there but lets not share with them with a good rate special also. My realtors will not be too impressed with this latest strategy, they know I support Meridian and never speak negatively of them. I have sent them millions in business where I never received a commission as it didn’t fit the requirements of the broker division but did at the branch level and I put the client first of course.

  7. Because Meridian relies on brokers to bring in business for their niche products including mortgages where Meridian earns sizable fees. Personally speaking, it is somewhat unprofessional how they come to the brokerage to pitch their services and yet they shut out brokers out of such a critical offering.

  8. We don’t and never have, but think about it. You help a lender build their book of business, promote them professionally and work in a lot of cases like mine for nothing. I am not saying they can’t have a rate special but keep it in-house for strategy purposes. If you are going to promote it and advertise it you are slapping your business partners in the face. think about it Marc, my office is right beside the Meridian Branch, my clients who I have referred to them are closing on their mortgages now walking into the branch seeing the 2.99 special? What do you say? In a professional environment you don’t beat down the ones that helped you succeed.

  9. I think Marie has a great point about Meridian promoting the rate to the public. Scotia and TD offer better rates directly to the public than they offer through brokers all the time but they do not advertise it.
    When you advertise the rate it is a different thing, Meridian management is really directly slapping brokers in the face on this one.

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