Tuesday, May 31, 2011

Canadian Banks Cutting Profit in Competition for Mortgage Customers

A shrinking market is making the banks hungry. But financing at cost now, means they are either going to become charities, or they have to play bait and switch with the carrying costs to the consumer. Or they are in a grow or die phase and as soon as "grow" ends . . .

In a slowing market, banks fight over mortgages
“There’s a lot of signs of mortgage competition out there,” said Darko Mihilic, an analyst at Cormark Securities. Not only are lenders incenting brokers and agents, they’re also “adjusting” some of their conventional mortgage products to make them more appealing to home buyers, for instance by extending the amortization period to as much as 40 years when the buyer can make a significant down payment.

Meanwhile, most of the big banks have announced a round of mortgage rate cuts over the past few days.

Such tactics seem to be paying off and some lenders are growing faster than others — TD grew its mortgage business by 8% in the most recent quarter, for example — than the overall market as they grab business from competitors

Hat Tip: Dan T at Greaterfool

Added: This parallels Australia as noted a week ago:
Cheap Loans as Bank War Hots Up (sic? ;-)

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