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Mortgage Broker News | 31 May 2011, 10:00 AM Agree 0
Brokers are finally seeing a change in consumer appetite for risk after the second chop to fixed rates in two weeks.
  • Shawn Dehkhodaei | 01 Jun 2011, 03:14 AM Agree 0
    Well, that maybe true, but the reasoning is not the rate drops; the reason for the client preference, is because of the insane amount of advertising and promotion that goes around fixed rates, because we as brokers know, the banks make WAY MORE money on fixed rates (especially on the payout penalties), than variables, and therefore I don't see this changing.

    The banks have systematically instilled fear in the hearts of consumers with regards to variable rates simply because they know that if the consumers choose variable mortgages, they'll be making less money. The reality is that a variable mortgage pays less interest in a 5-year span at ANY GIVEN time interval, and it always pays less penalties.
  • Elfie Hayes | 01 Jun 2011, 05:21 AM Agree 0
    Rate type is not a one size fits all solution. On any given day, a first time buyer who has bought to their comfort level is better off in a guaranteed fixed rate, where-as a seasoned home owner with plenty of equity should consider the VRM because they can better tolerate the shift in rates. Seniors who live on fixed incomes and still carry a mortgage would be wise to think fixed as well. But that's just my opinion. When advising a client on what is "best for them" I Like to discus their financial goals and then show them the difference between the fixed and variable. I do agree that there is more money to be made on a fixed rates, but the clients need is the most important factor when choosing a mortgage.
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