Money It’s getting more confusing to shop for mortgages

18:41  10 may  2018
18:41  10 may  2018 Source:   moneysense.ca

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Some of the most confusing mortgage disclosures are actually the least important ones. Reader question: How can I shop for home loans if lenders won't give me a Loan Estimate? If you can get a Loan Estimate, that' s better than just a "worksheet" or "scenario" because it provides certain

34 percent of first-time homebuyers aren’t aware it ’ s possible to get a home loan with a down If we’re operating under the assumption that mortgages are boring and confusing , it ’ s pretty easy to see why Know your mortgage options and shop smart. Most folks shop for clothes several times a year.

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It’s getting more confusing these days for consumers to understand how to read the mortgage market and a big part of that is driven by competition. A few weeks ago, TD Bank jacked up the rate on its five-year fixed mortgage by almost half a percentage point to 5.59 per cent. The other banks have followed suit in raising their rates pretty much across the board, but not to the same extent.

Then BMO came out this week with a teaser rate (available just to the end of the month) of just 2.45 per cent on its five-year variable rate, which adds up to a full percentage point off the bank’s prime rate.

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And it ’ s confusing because there are different kinds of lenders who all have a pitch as to why their model is the best. Can Shopping Around for a Mortgage Keep You from Getting One? 7 Tips to Get the Best Mortgage .

January 29, 2017. Getting a mortgage can be a very confusing process. Many mortgages run the gauntlet of between ten and thirty years. As with any product, it is important to shop around for a mortgage when you are considering buying a house.

Do you grab the variable low rate knowing it’s going to head back up? That depends on where you think rates are headed next.

READ: Why did mortgage rates just surge?

Do you go for the fixed rate because you want to lock in and figure you can negotiate a discount to what the banks are posting? Depends on how much of discount you can find off of the posted five-year fixed rate. And if you think central banks will soon be chopping rates again, which will make variable rates the place to be.

And what about the new Mortgage Qualifying Rate? The MQR, introduced last year, is something mortgage holders never had to consider before last year’s move by regulators and the Bank of Canada to tighten lending requirements in order to cool the housing bubble. This new rate is taken off a calculation that takes all the big banks’ posted five-year rates and finds a middle ground. The banks are supposed to take that number, roughly an average of all the banks, then add 200 basis points (two percentage points) on top of it, then see if the mortgage shopper can handle payments at that higher rate. If the applicants can’t, then they don’t qualify for the mortgage.

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“It is a good idea to shop around for mortgages in order to get better rates,” Sian says. Talk to homeowners and they’ll likely tell you about how complex, confusing and time-consuming the mortgage process can be. Knowing that, it ’ s certainly a good idea to arm yourself with as much

There's a lot of information to consider on a purchase mortgage or refinance, and most of it ' s confusing . You can't shop for rates and fees at the same time and be sure you're making a good choice. Get Today's Live Rates And APR.

READ: A look at some of the Toronto area homes that suffered huge price declines in 2017

The added layer of confusion for mortgage shoppers comes from the fact you can’t always guess where the MQR is going to land when the banks aren’t posting rates at the same levels and they keep changing them. But if you took your MQR based on TD’s posted rate of 5.59 per cent (meaning you’d have to be able to handle payments based on rates of 7.59 per cent), that is quite different from other banks who are posting their five-year fixed closer to 5 per cent.

One factor driving BMO’s promise of a full percentage point off the five-year variable rate is transparency, which the bank figures will help it compete with alternative lenders who aren’t bound by the same lending restrictions, experts say. In a sense the banks are playing the alternative lenders’ game, with attention grabbing short-term special rates, so consumers know they can easily get less than a higher posted rate.

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If you’ve been shopping for a mortgage lately, you’ll have figured out that rates can be all over the If a mortgage is insurable, it will qualify for the best rates. Most homebuyers know that if they Without a doubt, insurable vs. uninsurable has made the mortgage landscape significantly more confusing . Getting good solid advice is critical, and Mortgage Brokers have never been more important in the

A recent survey showed that many home buyers find the mortgage process to be confusing . Now you can see why it makes sense to do this before you start shopping for a house. This article explains the process of getting a mortgage loan.

“There’s a lot of competition out there now from alternative lenders who don’t have to meet the mortgage stress tests as well as by online brokers,” says Justin Thouin, CEO of lowestrates.ca. “BMO is seeing that unless they offer these lower rates, their mortgage business will suffer.”

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Mortgage expert Robert McLister of ratespy.com agrees, adding, “you’ve seen rising interest rates and mortgage rates, HSBC continuously undercutting the Big Banks, online and alternative lenders offering cheaper options as well as buyers who are smarter and negotiating harder. And we haven’t remotely seen how competitive it can get online.”

All this means just one thing. “The longer-term trend over the next few years is that mortgage markets will continue to get more competitive.”

It’s because of all those factors that Thouin maintains that while BMO’s rate of 2.45 per cent is a good one, most Canadians should have been able to get that all along. “Canadians have to realize that the mortgage rates the banks are offering aren’t what they should settle for,” says Thouin. “Right now, there are a lot of alternative lenders offering rates less than 2.45% five-year variable rate now.”

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shopping for a mortgage loan, most consumers are concerned about the interest rate and their monthly payment. • When consumers are confused , they are more likely to take on riskier loans: Research points to a relationship between consumer confusion about loan terms and conditions and

If you’ve been shopping for a mortgage lately, you’ll have figured out that rates can be all over the If a mortgage is insurable, it will qualify for the best rates. Most homebuyers know that if they Without a doubt, insurable vs. uninsurable has made the mortgage landscape significantly more confusing . Getting good solid advice is critical, and Mortgage Brokers have never been more important in the

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For instance, Sigma Mortgage is offering a 2.16 per cent variable closed (five-year term) while True North Mortgage is offering 2.21 per cent. And consumers are wising up. Ratespy.com’s McLister adds that four out of 10 mortgage seekers consult online lenders now but predicts that in five years it will be closer to 8 or 9 out of 10.

“While the banks will try to maintain their margins, they will have to negotiate,” says McLister. And because the mortgage rates banks advertise often isn’t the actual rate available (you can often get lower rates if you go in and negotiate with them) this makes BMO’s move to post the rock-bottom discount rate of 2.45% right on their website even more significant in that it gives consumers a better idea of what they can ask for.

“Hats off to BMO for posting it right on their site,” says McLister. “Kudos to them.” The game is on.

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