Five-year fixed rates decline below four per cent
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Calgary Herald ArchiveMake sure you get the best deal on your mortgage before signing on the dotted line.

Question: Looking from an historical perspective, when was the last time interest rates were as attractive as they are today?

Answer: We’ve never seen mortgage rates this low before.

The Bank of Canada’s overnight rate is at an all-time low and many lenders are posting five-year fixed mortgage rates well below four per cent.

At ING Direct, our five-year fixed rate is 3.89 per cent.

Question: What are the most important things for first-time homebuyers to know, when looking at getting their first mortgage?

Answer: Being prepared and organized is the key to finding the best mortgage to fit your needs. Tips to prepare for a first mortgage include:

Research mortgage rates available in the market and prepare yourself to apply for a pre-approval.

Check both with your primary bank and others to determine who is offering the most competitive rates.

Mortgage pre-approvals ensure you can secure a rate guarantee — getting the best rate available at the time of your application for up to 90 to 120 days.

If you don’t have time for the hassle of a mortgage application, seek the help of an accredited mortgage broker or apply for a rate hold.

A rate hold, which is currently only offered by ING Direct in Canada, will enable you to hold a mortgage rate for 120 days without going through the mortgage pre-application process.

If you are comfortable with the rate secured and have time to complete a mortgage pre-application, be prepared to prove what you say.

Make a copy of a current pay stub and he following are answers given by Martin Beaudry, vice-president, retail lending, of ING Direct, to questions by editor Barb Livingstone:

Question: What has been the general range of mortgage rates over the last 10 years?
Answer: Five-year fixed mortgage rates over the past 10 years have ranged from as high as 8.50 per cent to as low as 3.89 per cent — the rate we are offering today. Here’s the backup: Historical posted five-year fixed rates: www.bankofcanada.ca /en/rates/ sel_hist.html;

www.bankofcanada.ca /pdf/ annual_page57_page58.pdf (soft copy attached)

ING Direct’s rate of 3.89 per cent: www.ingdirect.ca /en/

Question: What are the most important things for homebuyers who are moving up into a new home, or who are renegotiating their mortgage to know? Answer: If you are moving up, make sure you take advantage of the long rate guarantees offered.

Research shows that those with existing mortgages are the ones who could benefit most from a rate hold (securing a rate in advance without having to get a mortgage pre-approval) or guarantee.

An Angus Reid survey that ING Direct commissioned found that of the Canadians surveyed whose mortgages have come up for renewal, more than one quarter (27 per cent) 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 means Canadians could be missing out on the opportunity to save thousands of dollars over the long term.

If you are thinking of breaking your mortgage, ensure that you explore the options of capitalizing the penalty (adding the penalty to the principal amount of your mortgage) or refinancing your mortgage to cover the penalty and obtain a lower rate.

A lender with your best interests in mind can guide you in making that decision. request your employer to write a letter confirming the terms of your employment, prepare copies of your credit card or bank statements and bring proof of the source of your down payment (savings, gift, investments).

Once you have secured your pre-approval, determine what size and features you really need in a home and stick to your plan and budget when shopping.

Hiring a qualified real estate professional to help you find your home is a good idea.

Question: What is the one thing people should keep in mind, to get the mortgage that is best, and right, for them?

Answer: Choose a mortgage with an institution that provides flexibility with pre-payments, one that is up front about rates and always gives you its best offer.

Sometimes, negotiating a better rate doesn’t mean that you’ll actually get the best deal today or in the long term.

Question: Is there any other advice you have for first-time or new homebuyers?


Answer: Weigh the pros and cons of choosing a variable over a fixed-rate mortgage.