Mortgage Rates: A lost perspective

Has the rate war gone too far? It would appear so. This is very important as we approach the spring market and lenders start flogging “special” rates. Many mortgage holders have lost sight of the more important aspects of a mortgage because of the blinding effect that an interest rate can have on them. We’re at historical lows with interest rates – mortgages are the cheapest they have ever been. But, people are fighting over 5/100th of a percent! This is crazy. We, as brokers, understand the importance of rate, but, here’s the problem. Because of the blinding effect created by rate, and rate only, people are taking mortgage deals that aren’t what they’re cut out to be and they don’t find out until it’s too late, whether that’s by way of a large penalty, not being able to transfer or refi, exit through sale only, inability to pre-pay or port, etc. We’ve been approached by many borrowers looking for help, and it’s not until this point that the shortcomings of their restricted or inferior products become apparent. The result is they’re stuck and our hands are tied. And for what? On a 100K mortgage at today’s 5 yr rate we’re talking about approximately $2 per month or $120 over the term. All things being equal a better rate is a better rate. But, in mortgages all things, unfortunately, aren’t equal. Bottom line is, make sure that when you’re working with a bank or broker they know what they’re doing and what they’re selling. At the end of the day, you’re the one who has to live with the mortgage.

– The IMF came out a couple weeks back stating that the CDN housing market is still overvalued
– The IMF also urged Ottawa to intervene with more rule changes if hyper-borrowing doesn’t slow down
– Rates are going to be low for a long time to come, barring some unforeseen positive economic shock
– Collateral mortgages have been receiving a lot of bad press lately. The problem is that it’s unfounded. Registering mortgages collaterally is not a new thing, this has been going on for a long time. If you have concerns or don’t understand, please call us. We’ll explain what a collateral really is along with the pros and the cons.

Thanks again for your support and referrals. We’re more than happy to help you, your friends and family with their real estate financing.

Talk soon,
Gord, Steve and Jeff

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