Mortgage brokers get into holiday sales spirit
Forget about lining up to buy a flat screen television, Black Friday may be all about mortgage rates this year.
Thanksgiving in the U.S. is a tough day to find a broker at work, but an Atlanta-based mortgage organization says Americans can get the best deal in months — thanks to a lack of trading in bonds.
Getting into the holiday spirit, a Canadian mortgage broker says he has secured funding from a major credit union to offer a one-day special on a five-year fixed-rate mortgage for a record low 2.59 per cent. On the variable side, the 24-hour special takes rates to 2.05 per cent, which is just above the two per cent rate offered by Investors Group in the spring that sent the market into a frenzy.
So-called “sales” in the mortgage market may not be that unusual — they pop up every spring — but this would be the first for Black Friday, normally a time the housing market slows down as we head into the Christmas season.
Gibran Nicholas, chief executive of CMPS Institute, which certifies mortgage planning specialists in the U.S., said the lack of liquidity in the market because of the holidays can mean dramatic swings in bond prices, on which mortgages rates are based.
“There have only been two days in the last 18 months where mortgage rates have been as low as they are now,” said Nicholas. “The problem is even if you can get a mortgage broker on the phone, they might be on vacation. It’s an important story because if you can get your banker on the phone, even though it’s the furthest thing on your mind because you want to spend time with your family, now might be the perfect time to lock in your rate.”
Rob McLister, editor of Canadian Mortgage Trends, said there are times of the year when lenders are willing to offer better deals. Usually those sales happen to kick off the busy spring season, which in the past has seen Bank of Montreal unleash on the market a 2.99 per cent deal on a five-year mortgage. That rate has twice helped set off a rate war among the major banks.
McLister, who is also a broker and runs ratespy.com, is upping the ante and is introducing the fiveyear fixed rate mortgage of 2.59 per cent, which he maintains ties the record for lowest rate for that term.
He says DUCA, an Ontario credit union, has agreed to finance the 2.59 per cent special, but he won’t say who is providing him funding for his five-year variable rate product, which is 95 basis points off of prime. He is offering both deals only on Friday and then the sale is over.
“I can’t say who the later (variable rate) is being funded by or I’ll be cut off by them. They have other (clients they fund),” says McLister.
Getting a deal on a mortgage is only one element of making sure you get a good rate. The other is guessing which way rates are headed. A good deal doesn’t mean much if rates are double where they are today, something to keep in mind in the wake of the Organization for Economic Co-operation and Development calling this week for the Bank of Canada to raise rates next May.