Banks are at it again… calling mortgage clients before maturity..
With all the recent talk in the media about ‘rate wars’ and ‘mortgage market share’, it was only a matter of time before we saw this happening. Yes, the Banksters are at it again.
We’re getting reports that Banks are contacting borrowers 4, 5 and even 6 months prior to maturity. Supposedly, they are calling to ‘offer a great rate, if you sign now!’ Hey, that sounds great. Except the interest rates that we see being offered aren’t really that great. In fact, they are higher than what is available in the wholesale market.
This isn’t anything new. We saw this happen in late 2008 and early 2009. The Banks were telling clients to lock into Fixed rates if they were in Variable (and we told our clients to stick with Variable as interest rates were heading down… sure enough, they did go down)…. And they were offering supposed ‘special rates’ 4 to 6 months prior to maturity. The only problem is that the interest rates being offered were not as good as the Banks made it seem. And the timing of the product offerings were clearly wrong.
What makes this problem even more complex today, is that some of the Banks are offering NO FRILLS mortgages with limited prepayment privileges and NO option to pay the mortgage out in full unless you sell the house. They dangle an attractive interest rate but forget to tell you about the product limitations. STAY away from these products. They will come back to bite you in your bottom….. bottom line, that is.
Here’s some advice… Before signing any renewal offer, speak with your Mortgage Broker… find out if that offer and product are really as good as the Bank makes it seem. The stats tell us that most Canadians will not bother shopping and just sign their renewal offer… and that’s too bad. A 0.40% difference in rate on a $250,000 mortgage will cost you $4774 in the first 5 years alone. Don’t be so quick to sign what the Bank offers you… don’t be complacent….you could pay dearly for it.
Money saving tips, Mortgage News, Mortgage Tips, Mortgage Trends
Steve Garganis View All
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.
I disagree with this post. Here’s why. First as an agent much like yourself, it’s up to you (and I) to also call our clients regularly. Second, of course they’re going to call BEFORE they send out letters, it’s their right. And third, they call while the client is still outside of 120-days so that they can offer a rate that MAY be better than what’s available later in the year, so they prey on the fear of the unknown. I can’t willingly tell my clients not to take a great deal (as was offered from BNS for example), because it may bite ME in the bottom. Line, that is.
Thanks for input… Calling a client early is fine.. but I’ve yet to see ANY Bank offer a great rate this early… Getting more quotes and advice from an unbiased and neutral party juts makes more sense… A broker can provide this…
Speaking of advice… let’s not forget the Banks have been telling Canadians to take Fixed rates for years and decades…this hasn’t been the cheapest way to finance a home…
Another interesting announcement… The govt has come out with a Code of Conduct for mortgage prepayment disclosure… this should prove interesting given that there are several smaller lenders that don’t charge the obscene penalties that the BIG SIX banks do… they still use the older, simplified formula that doesn’t involve the discount… but that’s for another article… You mentioned Scotia… have you seen some of their penalties? I have.. and they are just awful… remember the $30k penalty that was reported by CBC.ca? http://bit.ly/lc3Pxu