There’s been no shortage of change, news or predictions about the economy, and specifically about the mortgage industry since the beginning of the year. It’s hard to keep up and to determine what’s vogue. By all appearances one issue that won’t go away is the call for more changes to the mortgage rules. That’s the one constant drumbeat in this symphony of industry news. But if you listen closely you’ll hear something that we’ve rarely ever heard before, banks talking smack and taking dead aim at each other.
Historically speaking the banks have always adhered to their own version of “Marquess of Queensberry” rules. They battle for profitability and market share supremacy within a pragmatic framework. The oligopoly has a good thing going and it’s their best interest to play nice. That’s always been the case, until now. I heard an ad on the radio today that made me take notice. The largest bank in Canada is advertising that consumers should be careful of another banks offering. They didn’t mention the other bank by name but they did refer to a 2.99%, five year mortgage. Gee, I wonder who that might be. The consumer is being warned to read the fine print, and not to make a decision in haste when we, Canada’s largest bank, can offer the same rate with all the privileges, minus 12 months of term. What we have to offer is better than what the guy across street is offering. There’s no vagueness or ambiguity in the messaging. Could this form of advertising change the way banks operate and compete in the market place? If it was to happen it would take some getting used too but in some ways it be refreshing, and I suspect a tad entertaining. But alas, I believe this is a one off situation. I think this is a case where the big boy sent a message to one his competitors. The message? Play nice and let’s all get ours. If you don’t, we’ll respond in kind.
One thing I learned over the years is that you don’t go around poking a bear in the eyes. It doesn’t matter if you have the will or disposition to battle. When the odds are stacked in the other sides favour, you act wisely. It’s been my experience that the bear will eventually regain full vision, and respond by kicking you in a region of your body which is due south of your eyes.
Until next time.