One broker is getting candid about rate buy downs, offering 2.89 per cent on five-year fixed to any client who qualifies and arguing a slowing market has mandated the move.
“Buying down rates is not for everyone,” said Darin Bauer, a broker with Mortgage Intelligence in Toronto. “But I have several lenders who are offering really attractively low rates and December is a very slow month so I believe bought-down rates will bring more business through the door.”
A check with Bauer`s website TorontoMortgageSite.com indicates that he is offering a five-year fixed mortgage a 2.89 per cent. The offer is available for a home purchase, mortgage refinance or renewal. The rate, which can be held for up to 120 days, is ideal for home buyers who have a purchase coming within the next three months, said Bauer.
The seasonal winter slowdown has been exacerbated by recent mortgage rules changes laid down by the government . They’ve cut off many first-time buyers from the housing market and taken the steam off refi deals.
While it is a common strategy, some mortgage brokers hold a dim view of buying down rates arguing the practice destroys a broker’s credibility by putting the focus on rate and away from the true value of a mortgage professional’s independent advice.
“If you’re a single, independent mortgage broker trying to buy down rate in order to keep a client from going over to a bank offering a better rate, you are competing with the bank,” Ad Lakhanpal, with Mortgage Alliance in Oakville, Ont, told MortgageBrokerNews.ca in an earlier interview. “You are not going to win that competition.”
However, Bauer believes the time is now for buydowns because some lenders have already lowered their rates to a very attractive level.
“I have a lender who is already offering 2.99 per cent and another offering 2.94 per cent on five-year fixed mortgages,” he said. “So the buy down is not that huge, plus I still earn some revenue from points programs.”
He also said another lender is offering 2.89 per cent for high-ratio, insured five-year mortgages.