Because we, at Morcan Direct, like to keep our clients informed we’ve compiled a list of some pertinent information your banks would prefer you didn’t know:
- An extensive study recently conducted by the Bank of Canada (BoC) concluded that Canadians with the best mortgage rates tend to be those who use brokers. They found that brokers significantly lower “search costs” and one average reduce rates by 17.5 basis points. That represents $1,670 worth of savings on interest on a $200,000 mortgage over 5 years.
- In another recent study by the Bank of Canada it was found that banks are slow to pass on cuts in interest rates onto their customers and of the 6 biggest banks in Canada “five of the six largest banks adjust rates upward more quickly when there are upward cost pressures than downward when costs fall”.
- In a report done following the announcement of the Bank of Canada’s decision to lower amortization and to limit Canadians ability to refinance Moody’s concluded that these reforms would be “credit positive for Canada’s banking system and its bondholders.” The report goes on to forewarn that these new measures will most likely see an increase in unsecured lines of credit, a facet of banking which generates higher interest rates and therefore far greater profits for the banks.
- A warning to our customers: TD and some other banks are now offering the opportunity to register the collateral in their property for an amount of up to 125% of the approved principal amount of the mortgage. While this may seem uncharacteristic altruistic on the banks part clients should be ware that taking such an action would most likely leave you unable to refinance your mortgage or shop your mortgage around with other lenders. This gives TD and the other banks an immense advantage when it comes to negotiating a refinance.
For more detailed information on any of the items below feel free to contact us at 416-214-9000 or through our website’s contact form.