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RBC Mortgage Specialist crosses the line.

They say competition is good for the consumer.   And I must agree.. this is part of what a Mortgage Broker does…A Broker determines a borrower’s needs, goals and objectives…..and then go to the market to seek out the most competitive mortgage product for that client…

Last week, I received what must be the most inaccurate piece of marketing propaganda I have ever seen in my 21 years in the Financial Services industry.  click here to view… At first, I was offended, angry and upset that RBC would put out something like this… but then I realized just how ignorant some Bank employees must be…..

Clearly, this RBC Mortgage Specialist thinks it’s okay to spread lies in an attempt to win over more mortgage business and discredit Mortgage Brokers . .. It’s just too bad she didn’t take the time to do some research before publishing her propaganda.

I thought I’d take the time to clarify some of her misinformation…..I’m making some comments below so that other RBC Bankers can get their facts straight…..and maybe answer or address any concerns or questions the average borrower would have…

  • Brokers will charge set up fees and have other hidden costs you should be aware of.    A mortgage broker does not usually charge a set up fee... A broker fee MAY apply for harder to place mortgages and for commercial mortgages…. BUT all fees MUST be disclosed BEFORE a borrower signs any document.… there are NO hidden fees…all Mortgage Brokers are licensed provincially and must disclose all fees through a disclosure statement…  (most provinces have these regulations including BC, Alberta and Ontario)… By the way, Mortgage Specialists are NOT licensed by the government...
  • Ask the broker what their compensation will be.  Nothing wrong with that question… A broker’s compensation is based on the mortgage amount and product type…longer term products tend to pay brokers more.   But let’s ask the Bank Mortgage Specialists this question….  What compensation does she receive?   Did you know that the Bank Mortgage Specialists are paid more for selling a higher rate?  
  • Brokers will set you up with a financial institution based only on the lowest rate, no other factors.  Another completely false statement.  If you are a regular visitor of CanadaMortgageNews.ca then you know that interest rate is just one part of a mortgage…There are many other factors to consider such as a client’s personal needs, the terms of the mortgage, privileges and options….
  • When selling your mortgage, the broker and the financial institutions reviewing your file may pull numerous credit bureau requests.   This one makes me laugh…”numerous credit bureau requests” are NOT pulled when dealing with a broker.. In fact, the credit report that a broker pulls is considered a ‘soft hit’ by the credit reporting companies, just like the Banks… and the broker’s report is shared by the lender or lenders that underwrite and review the mortgage application…  it’s actually better to deal with a broker where there will only be ONE inquiry, rather than go to 5 or 6 banks and have them pull multiple inquiries….Numerous inquiries can affect your credit score in a negative way.
  • Brokers will not be there in a few months when you need to ask questions about your mortgage.   Any good mortgage broker will tell you they must stay in contact with their client…keep them informed….otherwise, how can they expect a borrower to come back to them for their future needs?  Brokers depend on repeat and referral business….  hmmm… let’s turn the tables… ask the RBC Mortgage Specialist how long they have been in their current position and how long they intend to stay in that position?    Ask yourself, how many times has your local branch changed account managers, branch manager?
  • Mortgage Brokers can most often find you the lowest rate on the market (well, that part is true and I’m glad to see this acknowledged… here’s a good link that proves this)  by taking advantage of this one time, one term rate offer the client has a price to pay.      No need to comment too much here…All mortgages have terms that expire… typical terms are 5 years… at the end of 5 years, borrowers can stay with their current Lender or go elsewhere…  A good broker will contact their clients at maturity and compare what their current Lender is offering and what the Mortgage Market is offering.

This post is a bit lengthy, but I thought it was important to be as thorough as possible…. I’m not sure how long this marketing piece will be in circulation but I know that the Canadian Association of Accredited Mortgage Professionals is aware of this and are in the process of contacting RBC to get them to take some sort of action with this RBC Mortgage Specialist…  We’ll update you as more news on this becomes available…

I do agree with one thing in this RBC piece…you really do need to check the credentials and credibility of your advisors…Hope you found this informative…

CBC news reports Scotiabank slams client with $30,000 penalty!

A word about world events the past 4 weeks…  We have seen a lot of turmoil overseas……  Egypt, Libya  and other middle east countries…. We need to pay attention…. Let’s hope for an immediate and peaceful resolution…

The Tsunami in Japan has been horrible… the images on TV are tough to watch…what a tragedy… Our hearts go out to the people of that nation.

Fixed rates drop slightly and Variable rates remain flat.

We have also seen how mortgage rates can be affected by these events… The uncertainty has caused the Bond market to fall…. and we even saw a very small rate reduction by the Big Banks… Posted Fixed rates are down around 10bps… 5 yr fixed is 5.34%. Continue reading “CBC news reports Scotiabank slams client with $30,000 penalty!”

Bond yields fall after Middle East turmoil

Earlier this month, we saw Fixed mortgage rates go up and the forecasts were calling for rates to continue to go up over the next 2 years.   It’s important to remember that all forecasts make certain assumptions and don’t allow for the unexpected… These forecasts may still be accurate but of course, no one was expecting the uprising in Egypt, now Libya and possibly other Middle East countries…

The Canada Bond yield has dropped around 22bps to 2.58% from a 10 month high of 2.80%.    This takes some of the pressure off to raise fixed rates… and we might even start to see some Fixed rate decreases if the Bond yields fall further…(or course, the Banks are famous for raising rates immediately but lowering them slowly and this was even identified by the most recent Bank of Canada quarterly review)

I can’t help but to reflect on Professor Moshe Milevsky’s article from a few weeks about how to deal with rising interest rates…. In this article he cautioned us about overreacting to warnings of huge rate hikes or calls to lock in your mortgage…    Wow, the timing of his article couldn’t be more perfect.   I recommend you take a moment and read what the Professor has to say.

TD and RBC CEO’s income $11million each for 2010…

Are the BIG SIX Bank CEO’s that good?

It’s that time of the year again… when Bank CEO salaries have to be reported… TD’s CEO Ed Clark earned $11.3million on profits of $4.6billion in 2010, RBC’s CEO Gord Nixon pocketed $11million. Congratulations….!   Staggering numbers considering that we are just coming out of (hopefully) the worst recession ever… click here for more on Bank salaries.

So what’s the problem?

There has been so much publicity about how strong our Canadian Banking system has been through this recession…. And yes, it’s true.. we have held it together very well.  But was it that our Bankers were that smart or just that far behind the times??

It has been said that Canada is always 5 years behind the U.S. Ever heard that saying?  Well, it’s true for many things, including Banking and Financial Services…   In 2006, we saw the introduction of 30, 35 and then 40 year amortization mortgages. We also saw $0 money down mortgages….. Interest only mortgages!! 107% loan to value financing!!!

These products were beginning to gain some popularity in Canada.. but then in October 2008, the U.S. mortgage crisis hit… and all the new products were pulled from the shelf.   Imagine if these products were introduced to Canada 5 years earlier…. Imagine how many of us would have been affected….  Don’t be fooled into believing that it was our Banking system that saved us…

Look, the plain truth is that we got lucky… we were a bit slow to embrace these products… and that’s really our infamous Canadian conservatism coming out… It’s got nothing to do with our Bankers being that much smarter… It’s got everything to do with you, the general public, the average Canadian, not taking to change quickly…. This is the real reason we didn’t suffer a worse fate.

How much did mortgage penalties contribute to Bank Profits?

Here’s a bit of math to play with…. Statistics tell us that on average, Canadians move or refinance their mortgage every three years…. The stats also tell us that approximately 75% of all mortgages are in a fixed rate term… I would venture to guess that probably 95% of those are in a 5 year fixed rate….  Okay, so now let’s look what the average penalty would cost you to break your mortgage…

And today, I have another example that I will share with you… it’s about a young couple that needed some help….  (I get these almost daily, by the way)….

A $250k mortgage with a 5.15% rate with 28 months til maturity…  The penalty quote to break the mortgage was $11k... I gave some advice and helped to get it down to $8k...    That penalty still works out to over 7 months interest. Can you say ka-ching!!   The Banks have made an absolute fortune on the backs of unsuspecting Canadians….

The Govt and the Banks should tighten credit card rules

Last November, the Banks pressured the Federal Govt to tighten mortgage lending, to make it harder to take a Variable Rate Mortgage… to make it harder to refinance your debts into a mortgage….  The results are bad for Canadians.. we now have to take a 5 year fixed rate mortgage in many cases… we now have to keep our higher interest credit card debt, loans, and other debt….  Canadians are being forced to keep these higher interest debts while Banks increase their profit margins…  Here’s a great article about Household Debt..

By the way, there are no rules for giving out a credit card…

Report shows Canadian borrowers are too complacent…don’t drink the koolaid.

That’s what a report in the latest Bank of Canada Review had to say…    This article in the National Post sums it up well…  “Simply put, borrowers are often complacent and end up paying more than they should.

This is exactly the reason I started this site…..To make you an informed borrower. Like the review said,  “consumers have different preferences and skills when shopping and bargaining for a mortgage and where lenders maximize profits based on observing these preferences and skills.”

So, how does the average Canadian borrower know if they are getting the absolute best rate or the right mortgage product?  Is there a better product with a different Bank, Financial institutions or other Lender?  How do you know if you aren’t speaking with an unbiased professional that doesn’t work for any one bank?  For me, there is only one sure way to know you are getting a highly competitive mortgage product…..You must deal with a Mortgage Broker.

Here’s another quote from the Bank of Canada Review…  Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers.”  I’m sure this comes as no surprise to most of us.

Never forget that the Banks are a business… and they are here to make a profit… It’s imperative to seek unbiased, market neutral advice…..  A Bank Mortgage Specialist just can’t be neutral or unbiased….They can only offer one set of products…  I save the best for last….

A Mortgage Broker helps to ‘creates competition’ as the report said.

Hopefully, this site will keep you informed and awake…Don’t settle for the status quo….

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