A rate hold is a lenders promise to maintain a certain interest rate for you over a specific period of time, usually 90-120 days. Dependent on the lender, you may be able to lock in at a rate at the time of filing your application, or during the application and approval process. This means that if rates are expected to rise, your mortgage professional can lock in at a lower rate before they do.
For instance, fixed mortgage rates are closely linked to government issued bonds. Bonds represent lenders benchmark for minimum earnings with the least amount of risk. They charge a premium to make riskier loans to consumers. Simply put, lenders see bonds as "safer" and mortgages as "riskier". Lenders therefore price mortgage rates higher to deal with the added risk. The difference between the two rates is the yield lenders require to lend money out at greatest risk on the market. Thank you so much for your continued support and I look forward to working with you.
While there are other factors that do influence fixed mortgage rates, you can see in the graph above the tightly knit relationship between government bonds and fixed mortgage rates.
Therefore, when bonds rise you can expect fixed mortgage rates to possibly also rise. If there is a sudden shift in the economy that forces bonds to rise, locking in at lower rate before fixed mortgages rates rise could save you a significant amount of money over the course of your mortgage.
However, a rate hold is still only part of the equation as you will still need to be fully approved by the lender for the deal to go through. The CENTUM 15 Minute Mortgage is the most advanced pre-qualification technology in the industry, allowing you to better understand how much mortgage you can qualify for. This will better assist you when looking to lock-in for a rate hold and throughout the home buying process. Please contact me directly if you have any questions, or visit www.centum.ca/anne_brill to complete the CENTUM 15 Minute Mortgage.
Thank you so much for your continued support and I look forward to working with you.
