Mortgage specialist argues RBC takeover will undermine competitive lending environment
Mortgage expert Rob McLister voiced concerns over HSBC Canada's sale to Royal Bank of Canada (RBC), fearing the deal will mean less transparency on the best interest rates available to mortgage shoppers.
The recent acquisition marks a loss for mortgage shoppers, according to McLister, Mortgage Columnist, Financial Post. HSBC was historically known for its transparent pricing, which helped keep competitors in check.
“Before RBC’s takeover, HSBC was routinely Canada’s most aggressive, transparent lender,” he said. “For eight years, I’ve been reporting on HSBC’s leading rates. No more.”
The impact is already evident. Since the takeover, the lowest nationally advertised variable mortgage rates have increased. Mortgage brokers are now leading the way with more competitive rates than advertised by major banks.
“For now, mortgage brokers are leading the way, led by price-slashers such as Butler Mortgage, Citadel Mortgage, True North, Ratehub and Nesto,” McLister noted. “While the lowest advertised bank rate is 6.69% for an uninsured variable, Butler advertises effective rates as low as 6.10%, including a cash rebate. The rate is higher if the mortgage is less than $650,000 or the closing is more than 45 days away, but it’s still considerably less than the offers advertised by banks.”
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While brokers offer competitive rates, some borrowers may still benefit from the broader services offered by traditional banks. Toronto-Dominion, currently eager to grow its mortgage portfolio, is reportedly offering substantial discounts.
"All the big banks have hidden “discretionary” deals, but HSBC was a different beast," McLister explains. "Its rates were transparent, meaning HSBC borrowers didn’t have to guess or negotiate."
The situation is particularly challenging for uninsured borrowers, who may be unable to switch lenders because of the government's mortgage stress test.
“Everyone needs ammunition to challenge their incumbent lender… a quote from another lender for leverage,” mortgage broker Ron Butler said. “Otherwise, they’ll end up with too high a rate.”
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