A few years ago, I published a study on Rate shopping sites. These sites were gaining popularity with consumers as a place to go if you wanted to get the best rates. And they attracted a lot of attention.
You know the sites… they have catchy ads like ‘shopping for the Best Mortgage rates in Canada’ or ‘comparing Canada’s mortgage brokers for the best rates’.
Hey, who doesn’t want the best rate? These ads work. Canadians were clicking these links to get more info.
Hey, who doesn’t want the best rate? These ads work. Canadians were clicking these links to get more info.
Sounds great, right? Yet, it’s not.
LOWEST RATE OR PAY THE LEAST AMOUNT OF MONEY TO OWN YOUR HOME?
The original study found that consumers wouldn’t ask too many questions. They were too rate focused and didn’t focus on the terms of the mortgage. Most consumers don’t bother asking any further questions or spend the time required to read the 30 or 40 pages of legal jargon in their mortgage. And this where it can become a costly experience.
The original study showed that if you asked a borrower whether they wanted the ‘lowest rate’ or ‘to pay the least of money on their mortgage’ , the average person would choose the latter. And make no mistake, these are two very different things.
My original study revealed that these sites didn’t shop all mortgage brokers or lenders. The sites listed only a small handful of brokers. Only brokers that got in early, would be compared….and only brokers that were willing to pay a fee per lead, can participate. The ‘low rates’ were NO FRILLS products, in most cases…products that carried restrictions, limitations and inflated prepayment penalties. Hardly a true comparison of ‘All mortgages and All mortgage brokers’. And hardly unbiased.
Today, not much has changed.. well, that’s not true. They’ve become worse. Here’s an update:
- One of these large sites was purchased by another online rate site. A quick review of their current rate offerings revealed they no longer had competitive rates. It’s advertising rates well above the best in today’s market. They seem to just be promoting Banks rates… which are higher than broker rates.
- Another popular site has a BIG conflict of interest, in my opinion. They decided to start their own mortgage brokerage but are still running and operating their Rate shopping site. Seriously, it’s true! This raises the obvious question, ‘how can they remain unbiased and neutral when they own one of the brokerages they are comparing?’ It’s like asking TD Waterhouse or Investor’s Group who has the best Investment Advisors? Or like asking Burger King or McDonald’s, ‘who makes the best burgers?’. If I ask Rogers who has the best cell service, I wonder if they will say ?
- And yet, you’ve see these sites advertised and promoted in our country’s largest newspapers, as unbiased and independent!! Anyone else see a problem with this.
HOW TO PAY THE LEAST OF AMOUNT OF MONEY TO OWN OUR HOMES
Hey, if you want to compare rates, it’s easier today. Just contact an experienced mortgage specialist. Ask a friend, your real estate lawyer, your real estate agent or financial advisor for a referral.
by Steve Garganis
