Canadian Real Estate magazine (CRE) recently surveyed homeowners about their mortgage broker. The survey was totally anonymous. Here are some of the results…
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There are some bad brokers out there. Our first experience, back in July, consisted of submitting all of our information and agreeing to to a credit inquiry (one that could potentially have affected our credit score) only to be told that we could get a 10 year fixed rate of …6.25%! 6.25%? RBC quoted us 6.15% and PC Financial was advertising 5.75%! On further inquiry, 90% of his “deals” went through two providers and he was “certain” we couldn’t go under 6.00%. And of course he wouldn’t provide any offers in writing. And this after telling me what a fantastic vacation in Palm Springs he’d just come back from! Whatever. The ones who are trying to pad their pockets at the clients’ expense are such a disservice to the industry.
I don’t disagree with you Sandra, but don’t forget the Big Banks don’t generally offer you the best rate up front either. They aren’t innocent either.
I have stated before, leverage to the banks what ING offers, i.e. 5 year fixed 5.75 go into the bank and ask for better, you will receive.
Did you mean you will “receive” or you will be “deceived”?
LET me break down the barriers of attaining lower mortgage rates, I defy anyone to try this and it not work (obviously the assumption is you qualify for bank/ing type mortgage–i.e. quality credit, time on job, tdsr, character, capital, etc–if you don’t then go to HomeTrust and get a private 2nd)
1) Go to any of the major bank websites–5 year fixed posted rate is 7.20% for all of them right now
2)Go to ING website 5 year fixed rate is 5.75%
3) Go to bank with ING printout, ANY bank will beat the ING rate.
That certainly wasn’t our experience. We met with a mortgage rep and then twice with the branch manager to try to talk RBC into matching the PC Financial rate (PC went to 5.7% on a 10 year) so that we wouldn’t have to pay changeover costs/go thru the hassle and they were completely uninterested. When we expressed our surprise that they would so easily let our business (we’ve been with them for 20 years and had other products and investments which we also moved) they told us flat out that if our mortgage wasn’t making them enough money they simply didn’t care if they had it or not.
For all of those getting renewals.
It costs a bank roughly 1-1.5% (of principal) in capture costs for each new mortgage. This means they can lower rates on renewal by 0.23%- 0.35% for a 5 year deal and still be as profitable as a new mortgage.
Banks weren’t even close to ING when ING had their rate special a few months back. I called a few banks and they almost laughed at me when I asked for 5.15% on a 5 year and 5.55% on a 10 year. /G
Hello John – Sorry but what are “capture costs”? Do all lenders have about the same capture costs? Thx. Kim
capture cost is a generic term for incremental costs for getting new business as apposed to renewing existing business.
For broker lenders this is:
broker finders fee costs 1%ish volume bonuses 0.12%ish
BDM costs 0.15%ish
and a couple others.
For regular banks the costs are diced up a little differently with the costs split among:
national ad campaigns,
branch costs(depreciation, water power heat etc)
sales rep bonuses etc.
I can’t really speak about the costs structure for the big 6 banks but CIBC,National Bank, Scotiabank, and TD are active in the broker market so the economics are likely to be roughly the same.
Thank you for the informative post John…
this is such a great thing.
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