Last week, we heard some potentially good news for Canadian consumers. Federal Finance Minister, Joe Oliver, announced Banks would have to provide consumers more disclosure on certain products, including collateral mortgages. We welcome more disclosure.
However, before we get too excited and give the Federal govt too much credit, let’s wait to see if this latest promise really happens. If you are wondering why I’m so skeptical, it’s with good reason. The Federal govt has not honored their commitments before. And I’m talking about the promise made to Canadians to charge a fair prepayment penalty… Remember that one? Continue reading “More disclosure.. but still no standardization of Mortgage Penalties.”
Almost 4 years ago, I reported that TD was about to make one of the biggest changes in mortgage history. They were about to register all their mortgages as a collateral charge. Consumer advocates spoke out against the collateral charge as they recognized it would limit a borrower’s future options.
A collateral charge is always used for secured lines of credit products. The charge does not require an amortization which allows the credit balance to go up and down. Using a collateral charge for ALL mortgage products gives the Banks more power. It allows them to attach other unsecured debt to your mortgage… Unsecured credit products such as loans, credit cards, unsecured lines of credit or other unsecured Bank debt. I bet most people don’t know that? Continue reading “Federal govt finally takes action on Collateral mortgages.”
The Federal govt of Canada and the Bank of Canada are supposed to operate independently. The Minister of Finance gives the Bank of Canada its objectives or its mandate. And the Bank of Canada is supposed to carry out that mandate. The dotted line is supposed to allow the Bank of Canada Governor to exercise his/her powers without fear of political influence.
But our current Finance Minister, Mr. Flaherty, doesn’t seem to like those rules. He has repeatedly opened his mouth at inopportune times. Take last year, for example, when he publicly criticized Manulife Bank and BMO for advertising a 2.99% 5 yr fixed rate. He actually asked them to pull those ads! Not that they were the lowest 5 yr fixed rates at the time, but they were the lowest advertised rates by a major BANK. (as my regular readers know, mortgage brokers had lower rates… as they usually do). Continue reading “New threat of Rate hikes… it’s called Finance Minister Flaherty.”
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.
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.”
Yesterday, we saw our Federal Minister of Finance, Jim Flaherty, admit to having his office phone up Manulife Financial and ask them to stop advertising their 2.89% 5 year fixed rate mortgage special. An unprecedented move for a government official… Yes, it’s true! But wait, it gets better (or worse). Flaherty admitted to calling up BMO personally, to ask them to stop advertising their 2.99% 5 year fixed rate (NO FRILLS mortgage). click here for the article.
Now, just a comment about these products and rates…. if you are a regular visitor to CanadaMortgageNews.ca then you’ll know the BMO low-rate (or NO FRILLS to be more accurate) is a terrible product with too many restrictions and limitations… Manulife has a decent product….rate is competitive, however, like most other Bank’s, there is some mystery about what their best rates really are… so once again, you can’t rely on a website or bank advertising when it comes to finding the best mortgage…a mortgage broker is the best way to get unbiased advice with access to dozens of Lenders. Continue reading “Canadian Govt doesn’t want you to find the lowest mortgage rate.”