Pre-Arranged Mortgages In Decline Amongst First-Time HomeBuyers

    BMO Banker cautions that poor financial decisions could leave young
    buyers overextended

    TORONTO, April 12 /CNW/ - There has been an industry-wide decline in the
number of first time homebuyers choosing to pre-arrange their mortgage before
making a house purchase offer; a trend which Cid Palacio, Vice President, BMO
Bank of Montreal, says could lead to problems down the road for young
    According to Ms. Palacio, industry surveys show the percentage of
first-time home buyers who pre-arranged a mortgage before they entered the
housing market has declined from 73 per cent in 2001 to 62 per cent today. Ms
Palacio suggests that this "troubling" trend may indicate that house buyers
are not developing a mortgage strategy in conjunction with an overall
financial plan and are not taking the time to do the necessary research before
making important financial decisions.
    "I'm concerned that not enough first-time home buyers are taking the time
to have a conversation with a financial or mortgage specialist to really
understand their options and to avoid getting into a financial arrangement
that, on the surface, may seem doable, but, in practice, could have many
flaws," said Ms. Palacio. She also cautioned that first time home buyers
should take the time to be informed, to be realistic and to be prepared,
before they venture out to shop for their dream home. Ms. Palacio offers the
following advice:

    Be informed

    "When shopping for a mortgage there's so much more to consider than just
the interest rate," cautions Ms. Palacio. "Depending on the mortgage features
and options you choose with the help of your banker or mortgage specialist,
the right mortgage and options could save you hundreds of thousands of dollars
over the term."

    Be realistic

    "Many first time homebuyers find it difficult to make the lifestyle
changes that often accompany home ownership," states Ms. Palacio. "Be
realistic about the lifestyle you wish to lead and that will help dictate what
you can afford."

    Be prepared

    "Pre-arrange your mortgage before you make an offer to buy a house," says
Ms. Palacio. "There are many compelling benefits to having a pre-arranged
mortgage, especially in today's competitive housing market where buyers are
being asked to make quick decisions on a sale," she notes. "A prearranged
mortgage can protect you from rate fluctuations by locking in an interest rate
for a number of months while you shop for a home, it helps establish a ceiling
on the amount you should be borrowing within the framework of your overall
budget and financial plan, and it gives you confidence before going into final
price negotiations with a house seller."
    "A well thought out mortgage strategy should not only make the purchase
easier but it should also set out a clear path to make you mortgage free
faster," said Ms. Palacio.

    Established in 1817 as Bank of Montreal, BMO Financial Group is a highly
diversified North American financial services organization. With total assets
of $356 billion as at January 31, 2007, and more than 35,000 employees, BMO
provides a broad range of retail banking, wealth management and investment
banking products and solutions. BMO Financial Group serves clients across
Canada through its Canadian retail arm, BMO Bank of Montreal and through its
wealth management firms BMO Nesbitt Burns, BMO InvestorLine and BMO Harris
Private Banking. BMO Capital Markets, our North American investment and
corporate banking division, provides a full suite of financial products and
services to our North American and international clients. In the United
States, BMO serves clients through Chicago-based Harris, an integrated
financial services organization that provides more than one million personal
and business clients with banking, lending, investing, financial planning,
trust administration, portfolio management, family office and wealth transfer

For further information:

For further information: Michael Edmonds, Toronto,, (416) 867-3996; Lucie Gosselin, Montreal,, (514) 877-1101; Laurie Grant, Vancouver,, (604) 665-7596; Internet :

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