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Are All Banks the Same or Do You Need to Shop Around?

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We all seem to become creatures of habit even when it comes to our banking. Once we settle into a particular bank then we tend to want to stick with that one. Even if we move we seek out a branch within the same Banking institution. One of the main reasons for this is because we do so much automated banking and auto withdrawals that it is a huge hassle to change over to a new Bank.

Even when we need additional banking services we will go to our own Bank first without shopping around.

The thing is, that the Banks are becoming much more competitive and it really is time to do some bargain shopping when it comes to additional banking services like loans and mortgages. It is also important to be aware of the marketing tactics.

It is spring time and the housing market is about to bloom. This means a lot of consumers are going to be on the hunt for mortgages. This is exciting for both buyers and sellers. BMO, TD, and CIBC have come out with some great rates and are perhaps the lowest we have ever seen.

So is the Royal Bank going to top this who happens to be our country’s biggest lender of mortgages? It may be their tactics are going to be a little different. They are coming across with a different approach. You know how some car dealers always run a big yearly promotion of offering employee’s rates for buying? Well the Royal Bank apparently is going to follow suit, with a big promo right along the same lines.

Currently RBC employees can get a 2.69% rate on a five year fixed mortgage. Now so can customers who want to take out their mortgage at the RBC. This is a limited time offer however, and it will be the lowest rate advertised yet. Don’t expect the rate to be the focal point of the marketing tactic as the RBC is taking a different approach. It is always the rate that becomes the focal point of the marketing, and some banks feel because there is more to a mortgage than just the rate it is misleading.

The trend seems to be headed towards marketing more of the features of the mortgage offerings. For example, how they can have to option to make extra mortgage payments or break the contract.

The major Banks are beginning to discover that they are no longer the only major money lenders. Other institutions are becoming more competitive in their pricing, and some are finding innovative ways to make the lending process easier.

Competition is good in any industry, and the way that the financial trends are going then it should serve both the buyers and sellers in the housing market quite well.

 

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Sam Seidman, CPA, CA, LPA
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Email: sam@torontoaccountant.ca

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