The Majority Find Mortgages Stressful

What have I done!?Two-thirds of Canadians do not find getting a mortgage to be straightforward.

And only 7% consider the mortgage process “stress-free.”

Those findings come from a new ING Direct/Angus Reid poll released this week.

The most stressful parts, according to survey participants, are:

  1. Negotiating a rate (59%)
  2. Deciding on the right term and payment schedule (55%)
  3. Getting customer service help from the lender (35%)

For younger borrowers (those age 18-34), 56% said that researching and comparing offers made the process more difficult. That’s understandable since banks and trust companies alone, quote rates on over 300 products. And that doesn’t include the thousands of rates offered by brokers, credit unions and wholesale lenders.

Researching-mortgagesSo, how do you simplify the process?

There are two main ways to seek out the optimal financing:

1.   Contact numerous lenders yourself and ask all the right questions.

2.   Engage a professional broker (or brokers) to do the heavy lifting and compare options for you.

But, remember three things:

  1. You can’t rely on a lender to provide objective information about competing products.
  2. It’s often the mortgage questions you don’t ask (specifically about the mortgage contract) that come back to bite you.
  3. Brokers don’t sell mortgages from all sources and may favour certain lenders.

As a result, you’ll invariably have to research multiple sources if you want to find the true “best” mortgage for you. In practice, most people reduce stress by settling for a mortgage that’s “good enough.”

In general, if:

a.   You’re within 5-10 basis points of the best rate (for your chosen term and mortgage type), and

b.   The mortgage’s flexibility matches your 5- to 10-year plans, and

c.   The mortgage doesn’t come with needless restrictions

…then you’ve done pretty well for yourself.


Sidebar: Among current and former mortgage holders:

  • 34% said lenders provided the most help when obtaining a mortgage
  • 20% said brokers provided the most help
  • 13% cited family and friends.

Naturally, one’s experience will depend on the competency, competitiveness and service of the mortgage professional(s) he/she deals with.


Survey Details:  On February 27, 2013, this survey was conducted online among a sample of 1,519 Canadian adults who are Angus Reid Forum panel members. The margin of error — which measures sampling variability — is +/- 2.5%, 19 times out of 20. The sample was balanced by age, gender and region according to the most recent census data.


Rob McLister, CMT

  1. Amazing article again !
    I love this part :
    ” You can’t rely on a lender to provide objective information about competing products.”

  2. I hate it when you ask a bank for its best rate and it gives you a rate. Then you find a cheaper rate somewhere else and the bank matches it. To me that is dishonest. I don’t understand why people deal with banks who operate like this.

  3. I just saw an Ad for a 5-year fixed rate mortgage for a 30 days quick close at 2.59 %.
    I don’t know how many banks would match it or even come close to it.
    Joe

  4. I completly agree with Sudhir, for me this is a huge INTEGRITY issue. I understand bank agents want to earn more business with highest rate possible but I think they also have an obligation to be honest and upfront with a consumer. I surely will never deal with a bank or lender like that has such strategies.

  5. Our last rate was shopped from two different brokers. Same lender. Two different rates. The lower rate saves us about $900 in interest.
    The higher rate broker would not compete with the lower rate, even with it being from the same lender.
    So we said bye bye, we must take the opportunity to save $900, rather then give it up to the bank for the reason of staying loyal to first broker.

  6. You’re just upset that people often waste brokers time asking for their best rate only to shop their mortgage back to their bank once the bank matches. That is not dishonest. It’s called negotiating and people who deal with banks know the game.
    Do you tell all your clients upfront that your best rate is the “best rate that earns you full commission” and that other brokers might buy down the rate and offer them a better deal?

  7. “they also have an obligation to be honest and upfront with a consumer”
    that’s many’s wish, but not the reality with Bank employees :)
    if they are honest and upfront, you will not make business with them :)

  8. Did the survey check to see how many people think waters wet, and the sky is blue…lol The best way to get a great rate is to be the brother of the mortgage broker (that’s me)…30 yr. @ 3.00% 5 yr. closed & before that 30 yr. @ 2.4% 5 yr. closed variable.

  9. I dont get why everyone is so upset. Welcome to the mortgage business. If we didnt have competition then why are we all in this industry. Its no different being at a bank or being a broker. if your the bank, you obviously lose profit when discounting their rates. Same goes for a broker, if you want to be competetive then cut down your commission bps and assist your client as well. I am sure not every broker goes full disclosure as to how much money they make for their commission and the fact that they can reduce their bps in order get a better rate for their client.

  10. “Do you tell all your clients upfront that your best rate is the “best rate that earns you full commission” and that other brokers might buy down the rate and offer them a better deal?”
    This!
    There will always be someone willing to work for less. Eventually TN will be running call centers out of India, its just a matter of time. If all you have to offer is rate, you will lose every time. Perfect example:
    “So we said bye bye, we must take the opportunity to save $900, rather then give it up to the bank for the reason of staying loyal to first broker.”
    And this makes perfect sense. If the products are identical, why pay more? If your a mortgage originator, what do you do? Don’t compete on the same product! 5yr is not the default best solution for every client, and as rob is always going on about, its not rate, its total cost of borrowing that really matters!
    So why not give the client a plan or strategy (imagine that!) that offers the lowest over all cost of borrowing, and get out of the rate buy down game.
    One quote that I just love is: “any monkey can take an application, and spit out a rate. If thats all you are bringing to the table, then be prepared to lose the deal every time!”
    Its time we all upped our game, low rates are just not enough any more….

  11. what a stupid comment, so a bank offers you 2.89% & you shop till you drop & get 2.88% so is the bank being dishonest ? give me a brake , its simply a matter of who you want to deal with, a large bank with 1000s of branches or call Pakistan 1800 number service for some cheap broker rate where a “vente latte” difference in price. Man I cannot believe how cheap some of you people are when it comes to mortgages. simply not a clear understanding of price & service. cant wait till the local dollar store opens up mortgage services.

  12. keep shopping Craiglist for mortgages Joe, nice must be an awesome product. Hey I just say 2.39 on craiglist !! where do i sign, unreal

  13. islandbroker is correct, hes probably the top 10% of brokers that have it right, the way the broker industry is going with “rate, rate,rate” dollar store mortgage is coming with 25bps pay on every deal because you dont know how to sell. from 2001-2010 any cardboard monkey can submit a deal , that has changed big time in the past 18 months. , keep selling rate guys more brokers will start working at starbucks serving me my lattes.

  14. Hi, my name is xxx. I am about to buy my first home. I have gone on the internet and did a little research on mortgages. This is what I have gathered.
    1. I would assume the best term for me (first time home buyer) would be 3 years. Reason being that my family could expand and I could need more room and have to move before the popular 5 year term many go for.
    2. Look for a lender that offers 20/20 payment privileges (because I might have some extra money laying around)
    3. Look for a mortgage that is portable and assumable (in case I want to take this mortgage with me if I leave before the 3 years or I want to sell my home to someone with the mortgage)
    Now, most important to me is the lowest rate. Why wouldn’t it be? I am assuming that all mortgage brokers can get me what I want. Why would I go with someone that is going to try and say its more than the rate, we offer blah blah blah. I dont really care. All brokers to my assumption should be telling me my options and getting me what I want.
    Like I said, I am about to buy a home. In the little research I have done, I have come to the conclusion that this is whats best for me.
    So to those who dont think the lowest rate is important, how about you deal with someone that has done a little research, then you will see that lowest rate will get you the deal.
    If you want to sell a higher rate, the try that on someone that has no clue.

  15. “we offer blah blah blah. I dont really care. All brokers to my assumption should be telling me my options and getting me what I want.”
    I would suggest not to tell that to your broker.
    No person with self respect will do for you all they can do after that comment.

  16. 3 year terms are the wrong choice for most first time buyers. Most FTBs don’t have enough savings to absorb potentially higher payments at renewal. 5 year terms are much safer and they are only .3% more. Plus they let you port and increase any time.
    Also, did you know over 99% of FTBs don’t use 20% prepayment privileges? You are doing yourself a disservice to ignore mortgages with 10% prepayments as many come with a better rate.
    Everything you’ve said leads me to believe you need the advice you don’t think you need.

  17. So why not give the client a plan or strategy (imagine that!) that offers the lowest over all cost of borrowing, and get out of the rate buy down game.
    =================================
    Please help me to understand what this might mean to the average person.
    Wouldn’t having the same mortgage at a lower rate be part of that strategy?
    I mean – all else being the same in terms of fees & flexibility.
    If the ‘strategy’ is to go accelerated bi-weekly & put in the max lump sum payments as often as possible… that’s not really much of a ‘strategy’. In fact, the argument that putting money into something that yields better than 3% doesn’t sound like the worst idea ever – so is a broker going to advise me to buy preferred corporate shares at 4%+ dividends and then funnel that back into my mortgage? Is a broker really willing to go through that much effort on a deal that might pay $1500?
    So besides those ideas above – I don’t really see what this mythical strategy could be.
    I’m not trying to be a jerk – in fact, if I’m missing something then I’d certainly like to learn how to better utilize my limited financial wherewithal.
    *Note to Rob – I’d love for there to be an option where I receive an email any time anyone responds to a comment that you posted. Love the site!*

  18. I don’t understand.
    Instead of getting offended or upset – why not learn to overcome that barrier and show that particular customer where your value is?
    If you could do so I’m sure they’d be impressed and would certainly give you their business.

  19. Strategy is more than telling you to make prepayments. It’s about uncovering needs you might not know you have – then picking the mortgage with the right features and least strings attached for the best price.
    Did you know for example that RBC only allows one lump sum prepayment per year? Do you know that some lenders waive your penalty if you double your mortgage? Do you know that some lenders let you out of a 5 year mortgage after three years with only a 3 month interest penalty? These are just a few examples of what laypeople might not know when comparing mortgages.
    Good mortgage advice routinely saves people disappointment after closing day. Like in any business, you can’t expect great advice for the lowest available price.

  20. “I surely will never deal with a bank or lender like that has such strategies.”
    Isn’t that what “dealing” is all about? Unfortunately, many people are intimidated by dealing in this country. Go anywhere else, that’s what you have to do to get what you want. Here we just expect it.
    If things were all about “giving up” the lowest rate to everyone who comes to us, you wouldn’t be in business for very long, believe me.

  21. What you have said makes sense to me. How valuable it is to me as to how many lump sum payments I can make or how valuable it is that I can double my mortgage and not pay a penalty is a whole other dialogue.
    Show me(or any client) how paying a rate of 0.2% more on a mortgage actually saves me money in the long run and I’ll buy in.
    On the other hand, you could still give me the best advice and the lowest rate (bought-down)…but then I guess you get a race to the bottom with the craigslist guys ;)

  22. Alot of you are acting like Chidlren. If you cant handle the heat of being competitive in the market or being in the Industry then should you really ask yourself if your doing this for the right reason. Banks will always be around in which i am sure there is a high turnover in brokers. In my 15 years in the mortgage industry I can sure tell you the service you get from broker is not the same as receiving it from the bank. Most brokers do not even contact their clients right after they have placed a mortgage. Secondly, dont forget the lenders also pay your wages to have you send business to them and build their portfolio. You shouldnt bash your competitors or your partners as we are all in this together.

  23. If you think there’s a high turnover of brokers, check out the turnover of mortgage salespeople in bank branches. I bet the average branch mortgage rep leaves his company or position after two years or less.

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