Comparing various products online has altered the way in which we shop. Whether it be buying a new TV or selecting a mortgage. As a result of these changes it has caused some mortgage lenders to become a little more creative in order to compete with each other.
A great many mortgage lenders are now stripping away certain features. In turn this is then allowing them to offer much lower rates.
We have always been keen on getting the lowest mortgage rate possible. But the ease with which comparison shopping allows us to find such through our computers, tablets or smartphones means that we have become even more fixated on them.
Bob Aggarwal president of Canadalend.com stated that “the majority of our phone calls are about rates these days, whereas before it might have been more about, “How can I get my money out fast?” or “What’s the quickest way to refinance my home?”
Many brokers are saying that a push for lower rates isn’t such a bad thing. But it has also led to some confusion. Most mortgage contracts were fairly standardized before. But that has now changed and a great many of them contain various clauses and conditions. This is now making it much harder for us the consumer to decipher what the difference is between the various products on offer.
For instance in cases where you are being offered a lower rate you may find that the mortgage lender adds much steeper penalties if you pay your mortgage off early. If you choose to chase the five extra basis points you are putting yourself at risk of having to pay thousands of dollars more in penalties in the future.
When it comes to prepayment privileges again you need to be wary. Such privileges allow you to pay more than you want off on your regular mortgage payments. This in turn means that you can reduce your debt a lot faster. But there are some mortgage lenders who may reduce the amount that they allow you to repay in order for you to get a much lower rate.
It should come as any surprise to you that mortgage lenders are lowering the rates that they offer to us, given just how competitive this market has now become. All mortgage lenders are now fighting for a share of this very lucrative market, especially as they are faced with such compressed margins.