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Posted 7 Comments on So-called “Best Rate sites” are put to the test with shocking results. Case study

So-called “Best Rate sites” are put to the test with shocking results.

which mortgageThere’s been a surge of ‘Best Rate’ sites popping up… Chances are, you’ve probably seen one or more of their online ads…   You know the ones…‘shopping’ for the Best mortgage rates in Canada’ and ‘comparing Canada’s mortgage brokers for the best rate”.   It does sound great… and it seems to be getting lots of attention… Even the media are covering and quoting these sites…  And although I like that these sites promote how Mortgage Brokers can offer great rates, I’ve noticed some disturbing trends that you need to watch out for.

“I JUST WANT THE BEST RATE”

You say you want the ‘best rate’?  Really?  Or do you want to pay the least amount of money on your mortgage?   I’ll bet it’s the latter.  Make no mistake, these two things are very different and I’ll prove it.  But let’s face it, the rate gets everyone’s attention.. Most people don’t want to hear anything beyond that.. until they get burned for $$thousands on the mortgage later on.

Now what if I told you that 80% of my clients were paying a rate of 1.35% during 2009 and 2010, would that get your attention?   Of course.  And it’s true.  80% of my clients were in a Variable Rate mortgage based on my recommendations….and almost all of them didn’t panic and lock into a fixed rate (like the BIG SIX BANKS wanted them to)…they stayed in those products based on my specific advice recommending they not lock into a Fixed rate….    That’s called being in the right product at the right time.  My average client saved $6,000 during that time. Continue reading “So-called “Best Rate sites” are put to the test with shocking results.”

Posted Consumer Debt

BMO caves in to Federal govt pressure and raises mortgage rate.

Bmo wide It was bound to happen.  BMO announced their so-called ‘low-rate’ (NO FRILLS) 5 yr fixed rate mortgage would be increasing to 3.09% from 2.99%.   This comes shortly after the Federal Minister of Finance, Jim Flaherty, said that he called BMO and asked them to pull their 2.99% ads.   Last week, the Minister’s office asked Manulife Bank to withdraw their recent ad promoting a similar low rate.  Flaherty i don't know

While, 2.99% isn’t the best rate today, it was the lowest advertised rate from the BIG SIX BANKs.    It was somewhat symbolic.    Of course, Mortgage Brokers have access to even lower rates through the wholesale mortgage market, but these lenders don’t have the deep advertising pockets that BMO or the other BIG SIX BANKs have.   So the publicity surrounding this rate and the increase will get much more air-time.   You can actually find full-featured 5 year mortgages at 2.89% today, through a good mortgage broker (a word of warning.. I’ve seen lower rates offered, and I have access to these products… but these products are not full-featured and come with some limitations that make them less attractive… just be careful when choosing your mortgage and your mortgage broker)… Continue reading “BMO caves in to Federal govt pressure and raises mortgage rate.”

Posted Interest rates

BMO’s 2.99% No Frills mortgage is back… and so is our warning to stay away from it!

thumbs downBmo wide So you’re shopping for a mortgage… and you see 2.99% advertised by BMO.. and you think, Wow, that’s a great rate!!… but is it really that great?   And is it really a great mortgage product?

Well, first, what if I told you there was a lower rate out there?   And what if I told you there was a lower rate without the restrictions and limitations of BMO’s NO FRILLS mortgage?

Ok, now that I got your attention, let’s continue…We saw this same product and rate advertised last year, in January 2012.   BMO promoted their NO FRILLS, oops,  I’m sorry, they want us to call it a ‘low-rate’ mortgage (guess that sounds better).   There was a buzz in the air.  My phone rang off the hook and my inbox was full of emails asking what this was all about. Continue reading “BMO’s 2.99% No Frills mortgage is back… and so is our warning to stay away from it!”

Posted Interest rates

Does 10 yr fixed rates make sense now?…

percentageFixed rates are still low…  and a question I seem to get asked more often these days is, “when does it make sense to take a 10 year fixed rate?”  And the answer, for me, is almost never.

Today, you can find a good 10 yr fixed rate under 3.70%.   That’s a historical low rate for a 10 yr term.   When you hear ‘record low’, it’s worth taking a look.

THE GOOD:

  • peace of mind… there is something to be said for knowing what your payments will be for the next 10 years.   It’s like buying insurance.
  • we are at historical low 10 year rates.
  • if you paid your mortgage out after the 5 year mark, your penalty is capped at 3 months interest (a hidden provision in our mortgage laws…. I’m sure the Bankers are trying to get this removed too). Continue reading “Does 10 yr fixed rates make sense now?…”
Posted Interest rates

Interest rates to stay low for longer than expected…

Mark Carney The, soon to be, ex-Bank of Canada Governor, Mark Carney, is leaving us with a present…  During yesterday’s Rate Announcement, the first of eight regularly scheduled rate meetings this year, Carney said the economy is growing at a slower pace than expected….  we having a cooling housing market….. inflation remains low and is not an immediate concern….  Last but not least, he expects the economy will not reach it’s full capacity in late 2014 and that withdrawing any monetary policy stimulus is less imminent than previously anticipated.

End result, no rate hikes are expected til 2014…  These comments come as a bit of a surprise given the Bank of Canada has wanted to raise rates for the past 2 years.  Well, maybe it’s Carney’s way of giving us a departing present….Let’s not look a gift horse in the mouth. Continue reading “Interest rates to stay low for longer than expected…”