ING’s New Rate Holds

ING has launched one of the most helpful broker tools in a long time.

It’s essentially a website where brokers can enter simple information about a borrower—including name, mortgage amount, email address, etc.—and get an instant rate hold for that person. 

(Normally, brokers must submit a full application to a lender to hold a mortgage rate.)

The technology is the first of its kind, as far as we know.  It is also extremely easy for brokers to use.

We spoke with Martin Beaudry, Vice President, Retail Lending at ING DIRECT for more insight into ING’s new Rate Hold, as well as ING’s pre-approval strategy in general…

CMT: Some lenders have totally eliminated pre-approvals because they're viewed as too expensive, have poor closing ratios, and subject the lender to adverse selection (i.e. whereby pre-approvals only fund if rates go up). ING, however, has embraced pre-approvals and rate holds.  From a purely numbers and business standpoint, why is that?    

Martin: Very simply, for 3 reasons:  One, Rate Holds are primarily designed for people who generally have a good knowledge of their ability to qualify for a mortgage. Guaranteeing a rate allows them to shop around for their home while ensuring they have the best rate up to 120 days in advance of their home's closing date. They make up a significant portion of our Clients. Two, ING DIRECT has been successful in converting these Rate Holds into funded mortgages.  The automatic Rate Hold process allows ING DIRECT to do this cost-effectively. Three, as a consumer advocate, helping Canadians save on their mortgages by offering a Rate Hold that secures the best rate within 120 days is an important part of the mortgage ‘experience.’

CMT: Given this new technology and ING's excellent rate-lookback policy, it appears ING is consciously trying to position itself as the leader in rate holds and pre-approvals.  Is that the case?

Martin:  Our Rate Hold and Preapproval offers add a lot of value by making the process easy and by empowering customers to shop around for their home. We feel everyone should take advantage of these guarantees. This is one more way we can assist customers in saving their money. 

CMT:  Rate holds are obviously much less expensive because they don't need to be underwritten.  Is there a chance that ING may someday go entirely to an automated rate hold system and eliminate manual pre-approvals?  Or does ING consider full pre-approvals essential to its business model?  

Martin:  Pre-approvals require more time because they provide customers the mortgage amount they qualify for based on the information provided, while guaranteeing a rate for up to 120 days. People with limited or no experience in dealing with mortgages tend to prefer pre-approvals.  We have also been successful in converting these applications into funded mortgages. Therefore, we plan on continuing to offer pre-approvals for the foreseeable future.

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Sidebar:  Here are a few other points of note about ING pre-approvals and rate holds…

• ING’s pre-approvals are among the best in the business because of their “look-back” feature.  This benefit ensures all customers receive the lowest rate ING offers during each customer’s pre-approval period—even if rates drop and then go back up.
• ING rate holds and pre-approvals each enable borrowers to lock in rates for up to 120 days.
• All ING Rate Hold customers receive a rate hold certificate automatically by email—a handy, time-saving feature.