Posted by: Vince Gaetano
A big five bank has showcased the 10 year fixed rate mortgage product at a competitive rate that will protect consumers from the looming danger of increased rates in 2016/2017 – the period where four and five year fixed rate mortgage terms renew.
The Bank of Montreal has for the second time in 2012 led the mortgage rate war with a 2.99% and 3.99% rate on their 5 and 10 year terms respectively (the 10 year term will be available March 11/12). Other lenders have launched campaigns with 4 year terms at 2.99% but the maturity date of these products is very troubling.
I personally believe the introduction of the 10 year product discounted rate is something that MonsterMortgage.ca and our clients should applaud.
Our ten year fixed rate mortgage strategy provides comfort to Canadians who are looking for a product that allows them to rid their mortgage at an accelerated pace and avoid the dangers of renewing at higher mortgage rates in 2016/2017.
Canadians face a distinct possibility of climbing interest rates in 2016/2017; setting up Canadian homeowners for a potential “payment shock”. The MonsterMortgage.ca 10 year fixed rate mortgage plan can reduce the amount of debt owning at maturity – minimizing any significant impact with high rates – you pay less interest when you owe less. MonsterMortgage.ca’s ability to offer a better 10 year term at 3.84-3.89% and with better product flexibility, provides Canadian home-owners the value they deserve compared to what BMO has presented with their “Low-Rate Mortgage”.
The Big Bank “Low-Rate Mortgage” products once again come short of what Canadians deserve. These “Low-Rate Mortgage” offerings are restrictive; forcing a 25 year amortization on Canadians and being fully closed without repayment, unless the property is sold to an unrelated party (sale-only clause). In addition, the “Low-Rate Mortgage” product only offers a paltry 10% + 10% prepayment clause; even the popular “skip a payment” and “mortgage cash account” options are NOT available to Canadians.
The real concern is whether Canadians who are lured into the 4 and 5 year terms will be able to afford 60-70% higher payments on their mortgage. It is extremely important to warn Canadians of the forecast of higher interest rates and how the March 8th statement by the Bank Of Canada Governor Mark Carney indicated that interest rates will be moving up sooner than people think.
Canadians should remember to ask themselves, “what do I fear in this interest rate climate?”
You might find that most Canadians value comfort, stability and discipline to get rid of their debt. Be the conduit for your financial future and offer yourself safety and certainty.
During these times, my honest belief is that a well developed mortgage plan that provides security for my clients, their families and their budgets will win you clients for a lifetime – a much greater value than any marketing campaign.