Beware bait and switch by your bank. With the mortgage rule changes imposed in 2017 and 2018 the price strategy for interest rates has become more complex.
The rule changes affected the ability for home buyers and owners to qualify for their mortgage and increased the rates. However, most people don’t realize other rules on the back-end for lenders increased their cost of lending. The result was different rates for high ratio borrowers (with less than 20% equity) and two different rate buckets for conventional borrowers (with more than 20% equity). This can be confusing for borrowers who hear advertised rates only to find out they can’t access that offer.
In 2018 I noticed radio advertising for the banks with low rates as if available to all people. In fact those rates were for high ratio borrowers only. Once a client applied they found out the rate was higher.
Beware bait and switch by your bank branch.
In the latter part of 2019 they changed the language to include the term “insured” mortgage attached to a given rate. But what does that mean to the average person listening to the radio?
For those homeowners at maturity for their mortgage term you want to know you are receiving the best rate offer for the next term. But at renewal your bank may offer you the best conventional rate even though you originally had an insured mortgage which can be renewed at lower insured rates. How would you know if you are getting the best offer?
Beware bait and switch by your bank branch.
The new rate buckets have caused some confusion for borrowers. This is exactly the reason everyone with a mortgage or in need of a mortgage should work with an independent mortgage broker to review all of your needs and ensure you are making an informed decision on your financing options. We work with major banks, credit unions, mortgage companies, alternative and private lenders. We won’t try to sign you up for another loan or new credit card. We are trained and licensed to offer mortgage financing services. Period.