Check out these hideous renewal offers from a Big 6 bank. Yes, that’s right, banks are still quoting loyal customers non-discounted posted rates—the rates virtually nobody is supposed to pay.
This particular bank must really hate its customers. Fortunately, the borrower, who was extremely well-qualified, came to us for a second opinion. We told him to thank his bank for assuming he is too stupid or lazy to shop around.
He then got the bank’s retention team on the phone and read them RateSpy’s 300-basis-point lower rates. “Miraculously,” the bank relented on its wretched malodorous offers and quoted him a reasonable rate: 1.89% for a 5-year fixed.
The moral: Banks still send out these insulting renewal letters, hoping they’ll catch you napping, hoping you’ll be blind to the competition and hoping you’ll just initial in the convenient little box. Thankfully, RateSpy readers don’t step into these rudimentary traps.
A Use for Cash Back Mortgages
A few lenders (e.g., RMG Mortgages) are now offering five-year 3% cashback mortgages at record-low rates, and they’re proving quite popular.
The cash can be used for almost anything. One area where it’s particularly useful if a borrower needs to pay off debt to bring their total debt service (TDS) ratio down, so they can qualify for the mortgage.
Online brokers are selling these 3% cash back products for as low as 2.19% with a 5-year fixed term.
Note: 3% cash back is like getting a roughly 65-bps discount off a standard 5-year interest rate.
This 2.19% deal requires default insurance or 35%+ equity. The maximum purchase price is $999,999 and the minimum credit score is 680. Early termination results in a partial clawback of the cash. Federal rules prohibit cash back from being used for your down payment.