RBC, Canada’s mortgage lending giant, admits that a rates war is being waged
In an urgent bid to preserve market share, banks are pulling out all the stops
To say Canada’s mortgage market is cutthroat is an understatement.
During a conference call yesterday, Dave McKay, chief executive of Royal Bank of Canada (RBC) — the country’s biggest mortgage lender — confessed that RBC is battling through what he called “historic” and “intense competition.”
In fact, RBC’s mortgage business is earning just a third of what it used to earn, he explained.
“Our mortgage business is seeing low interest margins driven by a volatile cost of funds and competitive pricing pressures,” the company added in an emailed statement today. “We believe these trends are impacting the entire industry.”
And RBC is right. They are.
In an urgent bid to preserve market share amid elevated interest rates, high debt loads and feeble real estate activity, banks are pulling out all the stops. Seemingly, every mortgage broker I talk to recounts tales of customers being quoted astonishingly low rates by their bank.
Yet, you wouldn’t guess there’s a rate war based on what’s being advertised.
