Here’s an interesting article and some of my comments about it below..
comment 1: Rate holds of 120 days is nothing new in mortgage broker land, 90-120 day rate holds have been the norm for years now. This allows buyers to secure a preapproval prior to shopping for a home or prior to a renewal….and it also gives buyers peace of mind when rates are changing regularly, it also gives them a snapshot of what they can qualify for. With rates on the downward float, it could be that the urgency isn’t there, but one never knows when they could creep back up. Better to know what you can qualify for and secure a rate. Mortgage brokers do preapprovals for free! Why wouldn’t you take advantage of some expert advise for free?
comment 2: WOW – It never ceases to amaze me that Canadians are still allowing “auto renewals” to take place. You see that number below (26%) The major banks boast about earning alot of business by renewing their clients at posted rates. Normally posted rates are at least a point and a half higher than what they have available to offer. I know some of us beleive they have our best interest at heart, if they did why wouldn’t they offer you the best rate up front…..sorry to break it to you..their out to earn money too…. So for those of you or people you know that are coming up for renewal, or wish to secure a rate hold for a refinance or renewal, be darn sure that you do some research and speak to a mortgage broker to look at the “best” options available. You will be saving yourself thousands of dollars…and wouldnt we all like to spend that money on ourselves rather than the people who already have lots of money 🙂 !
Canadian Investment News wrote:
Close to half of Canadian home buyers wait less than 30 days before their home’s closing date to secure a mortgage rate, according to a recent Angus Reid poll.
The poll, commissioned by INGDirect, found that 40% of Canadian mortgage holders waited only 30 days or less in advance of the home’s closing, while another 27% waited nearly two months.
According to ING Direct, this last minute behaviour indicates that many Canadians are not taking advantage of the savings inherent in securing rate guarantees which are available as early as 90 to 120 days before a home closes. Analysis shows that those who used the full rate guarantee period of 120 days, saved 0.18% on average or about a $1,800 over five years. These savings are based on a $200,000 mortgage with a 25 year amortization, five year fixed term at 6.96% (average posted five year fixed rate over last 10 years) and paid monthly.
According to Martin Beaudry, vice president of lending at ING Direct, not taking advantage of the full period available, is a missed opportunity. “Securing a rate guarantee, even before you start looking for a new home or your existing mortgage comes up for renewal, is a quick andsimple way to save your money on mortgage interest payments over the long term. In fact, it’s the reason we’ve made guaranteeing an early rate at ING Direct that much easier via the rate hold, which essentially allows someone to hold a great rate without having to provide the information required during a more traditional pre-approval process.”
The rate hold, introduced by ING Direct this month, allows home buyers to quickly and simply hold a great rate for up to 120 days. For fixed rates this means protecting a low rate today against any increases that may occur over that time. For variable rates, it holds the best spread from ING Direct Prime, so if the spread changes andthe rate increases as a result, Canadians are still protected. The service is the first of its kind in Canada, ING Direct says.
Taking full advantage of a rate guarantee period makes financial sense for both new home buyers and those with existing mortgages. In fact, those with existing mortgages are the ones who could benefit most from a rate hold.
**The survey found that of the 64% of Canadians whose mortgages have come up for renewal, over one quarter (27%) indicated they let their mortgage automatically renew. Not negotiating a better rate than what is offered in a renewal letter by the current lender, or looking to alternate lenders for the best rate available in the market, means Canadians could be missing out on the opportunity to get a better rate**
**The survey found that Quebeckers were the worst offenders, being most likely to let their mortgages auto renew (36%) and apply for a mortgage 30 days or less before their home’s closing date (52%).**
Finance/mortgage industry professional located in the Interior BC
First Time Buyer
Line of Credit
Lets talk about your financing needs today! Great rates and Great Service!
View All Posts