RateSpy’s edge is data, lots and lots of rate data — more so than most other Canadian rate comparison sites combined.

Now, why on earth would someone need access to 3,000 mortgage rates and 300+ lenders, you ask? It boils down to probability.

At any given time, different mortgage providers are motivated to offer more heavily discounted rates. They may have:

• Surplus liquidity (e.g., a credit union with excess deposits),
• A need to replace assets in securitization programs (which is why we see big discounts on mortgages with odd terms, like 3.4 years), or
• Internal volume targets that haven’t been met, thus encouraging more competitive pricing.

By definition, the more lenders and brokers one has to compare, the higher the probability of finding a lender motivated to discount below the market.

Of course, once you find a low-rate provider, that doesn’t mean its rate entails the lowest borrowing costs. Asking the right questions is mandatory to ensure the mortgage balances renewal risk with interest savings, and lets you make changes down the road—penalty free. This mortgage rate & features checklist can serve as a guide in that respect.

For these reasons, the interest rate alone can be a misleading number. If your lender or mortgage broker is quoting you a rate 10-15 basis points higher than what you’ve found online, it means nothing until you compare the features, restrictions and speed/quality of service from both providers

Our responsibility

Mortgage shoppers are, and will continue, flocking to rate comparison websites. But the information on these sites is vastly inadequate at the moment. Why, for example, don’t rate comparison sites speak to the penalty facing consumers if they break the mortgage early? Variations in penalty calculations can, and do, cost borrowers thousands more than small rate differences.

We have a responsibility to help consumers find the best overall deal, not just the best rate. The best deal factors in things like term selection, penalty cost, refinance restrictions, porting flexibility, advice on properly structuring an application, advice on building equity and so on.

Every Canadian rate comparison site I’ve seen underperforms in these areas. Even ours…for now. Our mission is to address these information deficiencies so consumers can identify the right combination of rate savings, flexibility and advice in an objective forum with no sales pressure.

Thereafter, we have to make it easier for folks to find competent mortgage professionals for a second opinion. Think about it. If you don’t have a trusted referral, where do you look to find a great broker or banker? How do you know the person you’re calling has the tenure, experience, qualifications and competitiveness to serve you best? Most existing advisor directories help you screen by little more than company, province or city.

Expect mortgage comparison sites to significantly evolve along these lines in 2014.

Sidebar: Rate comparison sites, in their present form, cater only to AAA fully-qualifying clients. Subprime,business-for-self and investor clients are a whole different conversation. There is currently no good mortgage comparison site for these customers, making knowledgeable mortgage advisors even more essential.

Rob McLister, CMT

Part of the Bank’s reasoning is reflected in these comments from its statement:

• “Total CPI inflation has been somewhat more subdued than projected in the January MPR as a result of weaker core inflation and lower mortgage interest costs…”
• “The Bank expects…the debt-to-income ratio [to stabilize] near current levels.”
• “…Residential investment is expected to decline further from historically high levels.”
• “With continued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2 per cent inflation target.”

For an excellent deciphering of the Bank’s press release, click here.

Today’s announcement shed little new light on the timing of the next prime rate change. Of course the BoC is still suggesting that the next rate move is up, but others, like David Madani of Capital Economics, aren’t so sure.

On Sunday, Madani said the “inevitable” rate hikes that so many predict could actually be pre-empted by policy loosening. He noted:

“Given the recent spat of weak economic data, below target range inflation and the presumably widening output gap, the market’s ruling out of interest rate cuts makes little sense.”

For now, as long as the 5-year bond yield stays under or within the psychological 1.50% to 1.60% range, there’s little danger of any notable rise in rates. After this morning’s rate announcement, bond yields remained flat at 1.32%.

The next BoC rate meeting is April 17.

Real estate lawyer Bob Aaron wrote a recent overview of title insurance here. He says, “Most real estate lawyers today regard title insurance as a critical component…and will usually not close a purchase without it.”

And no, lawyers don’t get big kickbacks for pushing title insurance. Aarons says lawyers “are not permitted to get referral fees/commissions” on title insurance. Lawyers recommend it because it protects the homeowner, limits the lawyer’s liability and makes closing more efficient.

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There are two broad types of title insurance:

1. Homeowner policies, which:     
   • Cover the homeowner
   • Last as long as you own the property
   • Are priced based on the property value
2. Lender policies, which:     
   • Protect the lender’s interest in your mortgage
   • Last as long as you have your mortgage
   • Are priced based on the mortgage size

The cost of title insurance varies widely depending on the location, type and value of the transaction. It starts at roughly $150-$350, but can climb from there. Here’s a calculator to estimate policy cost from FCT (First Canadian Title), Canada’s top provider of title insurance.

Once you pay for title insurance, you can often avoid paying for it again. Here are some cases where that’s true:

• You purchase a homeowner policy and stay in your home (Homeowner policies generally cover your property for as long as you own it.)
• You pick a lender that doesn’t require a lender title policy (Many do, but some don’t.)
• You refinance and choose a lender that pays for its own mortgage-only title policy (A broker can tell you which lenders do this. Keep in mind, a lender-only policy doesn’t protect you.)
• You switch lenders and your existing policy is “ported” to the new lender (If it can’t be ported, many lenders will pay the new title insurance premium for you on a straightforward switch.)

Title insurance can be switched to a new lender only under certain conditions, says Reta Coburn, president of FNF Canada, the Canadian division of the world’s largest title insurance organization. “Loan policies for lenders are transferable when the original mortgage is not being discharged from title and is simply being transferred by way of a registered assignment of mortgage,” she says.

The stipulations are that, “The original mortgage security must remain unchanged and no additional funds can be advanced, unless provided for under the original mortgage terms and conditions. The date of policy is the date of registration of the original mortgage, so the new lender assumes the coverage under the policy of the original lender at the date of that mortgage registration.”

Two related notes:

• The loan-to-value cannot increase if a title policy is being transferred to a new lender.
• Lenders don’t usually accept assignments of collateral charges, so for practical purposes a title policy on a collateral charge mortgage isn’t generally transferrable.

Eric Haslett, LLB, VP Residential Title Insurance at FCT, adds that: “Provided the new lender agrees to take an assignment of the existing mortgage, the…title insurance policy will follow the mortgage to the new lender and no additional title insurance premium is charged.”

But lenders don’t always accept a mortgage that a prior lender has registered. That’s because, as Haslett puts it, “The new lender is stuck with whatever the language is in the existing lender’s mortgage documents.”

And here’s an interesting side note:

Haslett says, “New lenders often don’t request assignments from an existing lender because (doing so) provides that lender an opportunity to…retain the borrower.”  If the old mortgage is discharged and a new mortgage is registered, however, “The existing lender often doesn’t know about the borrower moving until it’s too late.”

In addition, when clients change lenders using a refinance instead of an assignment, the party requesting the discharge statement (from the existing lender) doesn’t need to disclose the new lender’s name. As a result, the existing lender cannot see who they are competing against.

Haslett adds that, “If a lender wants the old mortgage discharged and a new mortgage registered, it will attract a new title insurance policy in the name of the new lender and result in a title insurance premium.”

Rob McLister, CMT