After 9 weeks at 7.20%, 5-year posted fixed rates may be coming down. RBC just lowered their rate by 1/4%, to 6.95%.
The other big banks will likely follow this lead and move to 6.95% as well.
I don’t understand the bank’s concept of having posted rate so freakin’ high, but when someone walk into the bank, they always offer something lower and competitive. So miss leading.
My financial advisor at CIBC told me if someone doesn’t ask for better they will get the posted rate so sometimes the bank wins with their rediculous posted rates.
That is just sick… Ofcourse, the people that didn’t ask for better rates are probably the one that needed the low rate the most. I guess I was only able to get the rate I got now because I told RBC that I also run inquiries with a mortgage broker.
Sorry for the double post, but I just wanted to say Thanks Adam.
Actually, at RBC, everyone gets their discounted rate up front without having to walk into the bank. Nobody EVER pays the posted rate. The renewal agreement with the discounted rate is automatically mailed to clients as their renewal date approaches. You don’t have to visit the branch and argue with anyone.
That said, if you want an even better rate, go visit the branch. Consider transfering in your RSP, Premium Visa card, Non-registered investments. If you offer to bring them more business, they will lower your rate. It’s win-win. It’s not a secret and every business is like that: If you offer to purchase 50 seats on an airplane, I’m sure Air Canada will cut you a deal. If you offer to buy 50 t-shirts, I’m sure the store will give you a better discount.
Although rate is important, reviewing your financial situation with your institution annually is a wise thing to do. They can often find you rebates, discounts, better products, and strategies that will make more of a difference in dollars & cents than a few percentage points on your mortgage rate.
The problem with banks is that they don’t tell you what other lenders have to offer. You have to do all the legwork and comparisons yourself. Or you have to trust that your bank’s offer is the best choice.
It is hard to trust someone with your biggest asset if they don’t sell more than one brand of mortgage.
FishingGuy: You don’t need banks to tell you what other lenders have to offer. Just spend 5 minutes on the internet and you’ll find out.
The truth is that brokers don’t “shop around” as much as you’d think. It’s impossible for them to know and properly understand that many different mortgages. They get volume bonuses so they generally like to sell for just a select few mortgage companies. There are so many micro-differences between mortgages that they can justify their selection if they’re ever challenged.
Mortgage advice isn’t different from any other product. Do you think the guy in a Golf Proshop will change his reccommendation if an alternative golf club is 5 or 10% cheaper?? If they like Titliest, they will always reccommend Titliest because of its qualities. If a mortgage broker gets nice commissions, gifts, nice commissions, great support, and exceppent service, who do you think he’ll reccommend to his clients??
Finally, what’s wrong with just selling one product. Where would you rather go to dinner if you feel like Spaghetti? A Family Restaurant or an Italian Restaurant. I would choose the Italian Restaurant: They know & support a narrow range of products REALLY well and don’t have to try and specialize in a menu containing many different items. The Italian Restaurant isn’t always the cheapest, but I’m sure you’d agree the food would be better!
Actually depending on the client, we do shop around. Yes, we have our favourite lenders we deal with, but each situation is different. Typically I place clients who need a fixed rate mortgage with a different lender than if they’re looking for a varaible, or line of credit, or rental, or stated income or zero down.
If the Golf Pro is looking out for his clients best interest, than even though he likes titliest, but the client needs to straighten out his drive, and the Nike driver will help him do that better, than he should be recommending Nike.
I agree, that there is nothing wrong with selling one product, but when you walk into the branch, you’re sitting accross from someone who is supposed to be selling you mortgages, investments, GIC’s, insurance, car financing, small business loans, it does kind of seem like a family restaurant.
I’ve talked with many people who have had awful experiences with a bank, like the person who told me their bank didn’t add the CMHC premium to their mortgage, and they were supposed to come up with an extra 10k at closing. Or the time my client was put into a 15 year amortization and they thought they were getting 25 years.
I’m not saying that brokers are perfect either, but when we’re focused just on mortgages, mistakes like these are less likely to happen.
There’s things that banks can do which brokers cannot, and there are things brokers can do which banks cannot, and I’m sure you’ll agree that at the end of the day, both our goals should be about doing what’s best for the client
When doing a deal, if I am the broker it does not matter to myeself whether I make $500 vs $750, people need to find someone they are comfortable with that truly looks out for them-the customer, I want a customer for life not for a quick buck, in the end I will make money from referrals, repeat business, a good broker realizes this and does not care about a few hundred dollars on an individual deal, bigger picture folks.
John is bang on with his comments. I will always find my clients the best product for his needs and sacrificing commission is not really a sacrifice as a satisfied and well served client will help to multiply my buisness with referels. Often the volume of mortgages obtained through a few lenders results not in more commission but in better rates to be passed on to the customers.
As Tom Tom said, “bank vs. broker” can be argued either way since there are so many different products offered.
I, for one, am glad to see someone sticking up for the banks. This forum is always so “pro-broker”.
As for the arguement, I like to parallel it to bringing your car to the auto repair shop for a tune-up. What would you say if the mechanic said he only looks after brakes and that you had to go to a different shop to get help with your engine? That’s essentially what a broker does…they can only help with the mortgage.
With banks, everything is under one roof. Advice can be tied to banking, investments, credit, retirement planning, and estate planning. The relationship is ongoing, not every 5yrs at renewal. Bank mortgage rates may be a few percentage points higher but that is significantly offset by the savings in other areas.
Peter S., different strokes for different folks. I have experienced going into a bank for a mortgage, to be honest it is a painful process, I would never take advice from a branch staff member on an investment either I would either do my own homework or speak with someone that does so exclusively–just my preference, just like mortgages–I would rather deal with a specialist vs. a generalist. Jack of all trades master of none. Per your analogy above, do you go to your family doctor to fix something major that is wrong with you? No you go to a specialist who deals exclusively with brains, back, ear and throat, etc. they deal with the issues all day every day not today I open a GIC and tomorrow I open a visa. Enough said.
Does anyone else think that Tom Tom is a banker for RBC perhaps?
What’s wrong with only offering one product? Well, if all one sees on a regular basis is round pegs, then they will always fit in round holes, won’t they?
AHHHH, I see a square peg! What do I do!!!!
I’m actually impressed with all the metaphors used! We’ve had restaurants, golf pros, airlines, mechanics, family doctors, and square pegs/round holes.
Yup, we’re definitely all sales people!
haha – I wish!
I’m just a satisfied client that has tried out banks and brokers. I just have an interest in mortgages.
I’ve said it before, but I don’t appreciate having to haggle to get a lender’s best deal on a mortgage. I’m looking for a financial product, not a piece of pottery in a third-world bazaar.
In the case of traditional banks, they post sky-high mortgage rates and give you discounts based on how well you argue. If you’re not financially literate and don’t have a good awareness of other rates and products, you generally get a terrible rate.
It shows contempt for customers. And I`m not a broker, nor do I play one on TV.
At least with the big banks, nobody ever pays the posted rate. That’s just what mortgage brokers tell people as one of their selling points. You don’t have to argue or haggle… it’s based on your “value”. The more products and dollars with the institution, the better your rate will be. I know with RBC, they give out the “valued rate” up front when the renewal is mailed to its clients. I only know that because my mortgage is with RBC.
Nobody gets a “terrible” rate and I realize I don’t get the “best” rate. However, I like to think I get value. At the end of the year, I’m financilly better off having everyone at one place. All my finances are with RBC so I am assigned to a Financial Planner. Don’t think I’m a millionaire… Family income is about $100k/yr, i have a mortgage, visa, and all my investment contributions to to RBC. Just with that, I’m significant enough to justify being assigned to Financial Planner and they’ve done some amazing things for me which have saved me thousands of dollars and more than offset a few percentage points on my mortgage. When was the last time a mortgage broker assisted a client form a Trust, do estate planning, and form a retirement strategy.
I also like all the metaphor’s in this posting so I’ll try to contribute: When booking a vacation, IS THE “BEST RATE” THE ONLY THING YOU LOOK FOR?
Let me tell you a story about my last two vacations to Mexico which were oddly similar (I go there about twice per year): Usually I go with Air Canada Vacations but recently I tried a Discount Vacation Company.
(1) Both times I arrived and my luggage was missing. With Air Canada, I found staff at a counter, filed my claim, and my luggage arrived the next morning on the daily flight. With the Discount people, nobody was at the desk to help me because THEY DIDN’T HAVE ONE, I waited 45 minutes on the phone with head-office to file my complaint (on my dime!), and I didn’t get my luggage until 5 days later because they only run 2 flights per week!
(2) Both times there were some airplane troubles delaying our departure from Mexico. Air Canada had a new plane there within 5 hours. Discount people couldn’t get a plane down there to get us for 3 days!!!
(3) Air Canada took us down on a comfortable new jet with seat-back TV’s. Discount people took us down on something very worn out, with no leg room, and overloaded with a large group heading down for Spring Break.
Anyway, my point is that you get what you pay for. Sure, I saved $500 on my vacation but I didn’t have my clothes for 5-days, I missed two days of work because they didn’t have a replacement plane, and I feared for my life on the old airplane I was on. The savings looked great on paper but it wasn’t worth it!
The Bank vs. Broker arguement is quite similar. Why is their rate lower? What did they strip out to offer you that low-low rate?
Rate isn’t everyting people!!
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