Many only use a quarter of the time available, limiting chance to secure
best mortgage ratesTORONTO, March 24 /CNW/ - A mortgage is one of the biggest expenses a
Canadian will take on during their lifetime, yet close to half wait less than
30 days before their home's closing date to secure a rate, according to a
recent Angus Reid poll. The poll, commissioned by ING DIRECT, found that 40
per cent of Canadian mortgage holders waited only 30 days or less in advance
of the home's closing, while another 27 per cent waited nearly two months.
This last minute behaviour indicates that many Canadians are not taking
advantage of the savings inherent in securing rate guarantees which are
available as early as 90 to 120 days before a home closes. Analysis shows that
those who used the full rate guarantee period of 120 days, saved 0.18 per cent
on average or about a $1,800 over five years. These savings are based on a
$200,000 mortgage with a 25 year amortization, five year fixed term at 6.96%
(average posted five year fixed rate over last 10 years) and paid monthly.
According to Martin Beaudry, Vice President of Lending at ING DIRECT, not
taking advantage of the full period available, is a missed opportunity.
"Securing a rate guarantee, even before you start looking for a new home or
your existing mortgage comes up for renewal, is a quick and simple way to save
your money on mortgage interest payments over the long term. In fact, it's the
reason we've made guaranteeing an early rate at ING DIRECT that much easier
via the rate hold, which essentially allows someone to hold a great rate
without having to provide the information required during a more traditional
pre-approval process."
The rate hold, introduced by ING DIRECT this month, allows Canadians to
quickly and simply hold a great rate for up to 120 days. For fixed rates this
means protecting a low rate today against any increases that may occur over
that time. For variable rates, it holds the best spread from ING DIRECT Prime,
so if the spread changes and the rate increases as a result, Canadians are
still protected. The service is the first of its kind in Canada.
Taking full advantage of a rate guarantee period makes financial sense
for both new home buyers and those with existing mortgages. In fact, those
with existing mortgages are the ones who could benefit most from a rate hold.
The survey found that of the 64 per cent of Canadians whose mortgages have
come up for renewal, over one quarter (27%) indicated they let their mortgage
automatically renew. Not negotiating a better rate than what is offered in a
renewal letter by the current lender, or looking to alternate lenders for the
best rate available in the market, means Canadians could be missing out on the
opportunity to get a better rate
The survey found that Quebeckers were the worst offenders, being most
likely to let their mortgages auto renew (36%) and apply for a mortgage 30
days or less before their home's closing date (52%).
About ING DIRECT Canada
ING DIRECT is Canada's largest direct bank with over 1.6 million Clients
and more than $24 billion in total assets. ING DIRECT gives the power of
saving to all Canadians by offering high-value, simple products such as high
interest savings accounts with no fees or service charges and low rates on
mortgages. Low cost, index-based mutual funds are sold through ING DIRECT
Funds Limited. ING DIRECT has been operating in Canada since 1997, and since
that time Clients have earned more than $3 billion in interest. Clients can
bank with ING DIRECT 24 hours a day, 7 days a week, at www.ingdirect.ca or by
calling 1-800 ING DIRECT.
About ING DIRECT Funds Limited
Mutual funds are offered by ING DIRECT Funds Limited, a wholly-owned
subsidiary of ING Bank of Canada. ING DIRECT Funds Limited offers mutual funds
across Canada except in Quebec and the Territories.
About ING DIRECT Asset Management Limited
ING DIRECT Asset Management Limited, a wholly owned subsidiary of ING
DIRECT, is the manager of the ING DIRECT Streetwise Funds.
For further information: To arrange an interview or for more
information, please contact: Lisa Naccarato, ING DIRECT, Office: (416)
758-5072, Mobile: (416) 885-0348, lnaccarato@ingdirect.ca; Lynnette Visaya,
ING DIRECT, Office: (416) 758-5544, lvisaya@ingdirect.ca
