Www Housemortgagemortgagecorp Tag Over House Mortgage Mortgage Corp Mortgage Rates & Mortgage Broker News in Canada

 
Company: Pillar financial Services Inc.
Position Title: Business Development Officer
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On Wednesday, the Federal Reserve dished out good news to mortgagors holding short-terms or variable rates.

The U.S. central bank threw a curveball at financial markets by projecting “extraordinarily low levels” for American interest rates through “at least” 2014. That’s a full year and a half later than its prior forecast.

With an 83% correlation* between Canadian and U.S. policy rates, this news will certainly impact Canada’s mortgage market.

In the stock market, “pennying” (a.k.a. penny jumping) happens all the time.

Pennying is when a seller offers shares one cent below a competing seller in order to undercut them (and vice versa when buying).

The equivalent in the mortgage business is pricing under a rival lender or broker by one basis point. (A basis point = 1/100th of a percentage point.)

Lenders and brokers penny each other because they know that the lowest rate often generates the most inquiries. An example from this week is First Ontario’s new 4-year promo priced at 2.98%, one basis point below the big banks’ 2.99%.

This pricing relies on the same psychology that motivates people to drive two kilometres to save two cents a litre on gas. The difference is: Gas is a pure commodity. Not so with mortgage services.

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