I’m Andrew Young of Mortgage Wise Financial and Community Mortgage Movement.
What’s the deal with the recent posted rake hike?
So, what is a posted rate? Well posted rates have been around since before I was born. The posted rate is an intricate sales tactic to lure you into a bank. Back in the day you would walk into a bank and you would see a posted rate on one of their walls. Following that you would then move into an office and talk with the banks’ mortgage specialist. They would then offer you a discounted rate (because you are such a good customer). Let’s say the posted rate is 6% and because you are such a “great” client, they give you a rate of 4.5%.
One of the reasons why a posted rate exists still is to help calculate a penalty. Higher posted rates equal higher penalties. So, what the banks are trying to do is eliminate those people who are trying to secure lower interest rates in going elsewhere. This is a problem with a lot of the banks nowadays, as there are some better variable rate mortgages available elsewhere. So, in short, a lot of people are now leaving banks to go chase a better rate. Therefore, the major banks are increasing their posted rate.
A lot of the lenders (non-banks) that we work with don’t use the traditional bank way of coming up with penalties. Instead they use their regular rates also known as straight rates or discounted rates. It could be advantageous for you to deal with a monoline lender, rather than a major bank. Another interesting fact is that banks do deal with brokers, but these are deals through different channels.
Now is the best time to have a look at your mortgage and make sure it is the best mortgage for you. I’m always here to help.
I’m Andrew Young and that’s the deal!