Tag Archives: credit unions

Mortgage Rates & Recalls Information You Really Need

Not nice of some of the big no-service banks to once again take advantage of us. Not nice – but expected. One of them is Scotiabank, who passed on 0.15% of the quarter point decrease last week. I just saw a number of line of credit statements…they’re not the only ones.

On a positive note, the Okanagan right now has some of the lowest mortgage rates in the country. Prospera Credit Union has a five year variable rate of 2.05%. If you want a fixed rate – and you should – it’s 2.65% posted rate, and profit sharing and rebate. Plus, you get to deal with a credit union and not the banks, and that’s the biggest bonus.

Over the past year there have to be about 50 million vehicle recalls of various sizes and degree of danger. That’s a staggering number, led by 30 million recalls for defective airbags, and tens of millions from General Motors.

The problem is that these recalls have to get to the vehicle owners and have to be fixed. Some are minor, but lots of others are safety issues that have caused a lot of fires and deaths. If you purchased a new vehicle, the manufacturer has your information and you’ll get a recall letter. That’s required by law. If you’ve moved, they do not have your address, so you’ll need to go to a dealer – any dealer – and get them to update your address.

If you purchased a used vehicle, they have no idea who you are, or how to reach you! You need to let your car’s manufacturer know that you own one of their vehicles. Whether it’s for a current recall or for one down the road! You can take your registration to a dealer and ask them to put it into the manufacturer’s system – NOT just into the dealer’s service department data base. And never give them your phone number or email address. You don’t want junk mail and solicitation – you want recall information. When you’re at the dealer they can also pull up any existing recalls right on the spot.

An alternate plan is to just do a google search for  your manufacturer in Canada. That’ll give you their website and a customer contact phone number that should be able to do the same thing.

However, the most urgent thing you need to do is to check your vehicle for recalls – now! Here is the link to Transport Canada, or you can just search: “Transport Canada safety recall” and you’ll get to the website. The site doesn’t need a serial number, just the year, make and model.

Link to Transport Canada to search recalls



Answering Your Mortgage Questions

Two weeks ago we talked about the risk of variable rate mortgages, in an environment where you have to know rates will start to jump up, vs. a fixed rate mortgage. Weren’t we smart, since five days later, the banks raised their five-year rates by 0.6%. And that’s just the start – stay tuned for more increases.

The story had a number of people ask some questions. So here are some of the notes of what you should keep in mind:

On a current fixed mortgage, the bank has guaranteed the rate, but you have signed for a penalty to get out of it. That is normally three months of interest, or something called an interest differential. That is the today rate vs. your rate right now, and takes the difference of what the bank would now be out if you just kept going.

The longer you have left on your current term, the higher that amount. Rough rule of thumb is that two years left or more, it probably won’t make sense to re-mortgage to today’s lower rate. If you have a year or so left, it’d be the three months of interest as a penalty.

But will paying this penalty and getting the chance to do a new mortgage save you money? That depends on what the saving in the rate is from your current mortgage to what you can negotiate today. It also depends on how long you intend to stay in your home. If you’re moving in the next year, there’s no way you’ll save money, you’ll just pay the penalty and won’t be around long enough to get the benefit of the lower rate. If you intend to stay in your home for a number of years, the savings will start to add up quickly.

What you need to do is:

-Get the amount of the penalty. There’s no cost to get it, but at least you’ll know.
-Your bank will offer you a blended rate. They’ll take the penalty and include it in your new mortgage payment. That may be what you can do, but don’t start there. Blending it in is not the same as shopping around for what may be a much better rate in the first place!
-Always get three quotes, and make one of them from the credit union. Their rates are the same or better, AND you will get money back at the end of the year through profit sharing, since you will be a member, not just a customer! For me, that’s like getting a quarter of a percent refunded each year.
-Lenders will guarantee a rate in writing for 60 days. That will let you shop around while you are protected on today’s rates, should they jump again! It does not mean you’re committed, or on the hook. It’s just a guarantee if you want to take advantage of it.
-Negotiate! You will always be able to get around ¾ to one full percent off their posted rates. Remember that posted rates are like the sticker price of a car – and who pays that?
-If you have a variable rate and want to fix it, or want to re-do your mortgage to a lower rate, you have to get the quotes and be prepared to take your business elsewhere.
-Yes, you can negotiate the penalty amount if they get to keep your business. I had a rental property with Scotiabank a decade ago. They wouldn’t budge on the three month penalty when I sold. But that meant they lost my principal residence mortgage. They made $1100 in penalty fees and have lost out on over $40,000 of interest income, because I walked. That didn’t make sense to me, but I got a great deal at the credit union for an hour of work.
-Last, but not least: When your lender says they “can’t” negotiate on the penalty, or the rate on a new mortgage, that’s just not true at all. Can’t means won’t! Remember that or it will cost you a lot of money. Yes they can, with approval of a manager, or even a regional manager. No does not mean no!

Some pre-Christmas Good News Stories

It only seems appropriate at this time of the year to focus on some good news in the world of finances and credit. So, in no particular order, here are eleven positives that are worth sharing or repeating:

Credit & debit cards: This was the year that our volume on debit cards exceeded that of credit cards. And according to a study just released, our raw charge volume on credit cards is also down 12% to the end of September. It’s always great news when we spend money we have, instead of borrowing it!

Mortgage rates: If you refinanced, you already know that you got some of the lowest rates in a generation – even more if you negotiated properly. And it looks like those low rates may stay for another three or six months. We’ll talk about that in January with some critical things you need to know and get ready for.

Just released is a Harris poll: In the current slowdown, or tail-end of the recession, two-thirds of us still intend to decrease our already reduced restaurant and entertainment spending. Put that together with this morning’s Bank of Canada release that our savings rate is 4.7%, and I’m very happy that we’re saving more and spending less.

In that same vein, using the slogan of one of the big no-service banks, you’re richer than you think, our net worth increased by $141 billion in the second quarter of the year. It is also expected to be the same or more for the third quarter, as our retirement savings and investments bounced back big-time, and home values started to creep up again. Don’t make that out to be permission to spend stupid again, but it’s great news when our savings, homes, and investments grow.

Let’s face it, gas prices are a big dent in our wallets each month. Last week, the government owned Mexican oil monopoly paid $1 billion to hedge prices for 2010 at a $57 a barrel level. They didn’t buy oil, they bough insurance contracts that they’d get at least $57 a barrel. Since it’s in the $70 range right now, it looks like some very smart producers think there’s about a 20% drop coming next year.

Some potential good news is that the federal government is looking into the huge fees that merchants, and ultimately you and me, pay on credit and debit card transactions. IF they have the guts to act, it’ll help us all, as merchants will more than likely pass on the fee savings in a prteey competitive climate.

If you remember, in October we talked about almost two-thirds of us living paycheque to paycheque, and that being broke is a choice. At that time I offered to work with anyone who is sick and tired of being broke. So right now, there are three families in Kelowna who are on the way to becoming debt free and a special shout-out to them.

The recession appears to be over, at least on paper, in the U.S. and here in Canada. The great news is that we dodged a big bullet and didn’t have nearly the collapse the U.S. had, and continues to have. Even better news is if, and that’s a big if, we learned the painful lessons of millions of Americans, and a ton of business that went under: Debt doesn’t pay, you cannot borrow your way to wealth, and too many payments will collapse your finances sooner or later.

One financial obligation most of us have is our cell phone. The great news is that three new second-tier cell phone companies are starting up in the New Year. Guaranteed, that’ll result in a big drop in our cell contracts. If your contract is up, or about to expire, do NOT sign another three year contract and get trapped. Leave it month by month until these three are in the market. In Canada, we are way overcharged on our cell bills. In the U.S. right now, it’s $40 a month for unlimited long distance, unlimited calling minutes, and texting! Compare that to your bill. Now, if you have an I-phone, I can’t help you – you can afford a phone that’s ten times more than my monthly bill, and you’re not going to get a break.

Can it be good news that some people are going to jail? You bet. There were a number of late-night infomercial people that finally got charged. They’re off the air and no longer conning people. I’ll share some of the details with you in January.

Cash-back from your banking: Last week, millions of us received our profit sharing from the credit unions we deal with. Great news all around: Great service, you’re a member/owner, better rates, AND profit sharing. Mine was just under $400 out of $42 million from Servus Credit Union. In the Okanagan, Interior Credit union shared $4 million with 30,000 members.

I wish you a very merry Christmas, focused on the real spirit and meaning of Christmas!

George Boelcke, CCP

What Just Happened This Week?

Wow – it’s only Wednesday and what a week it’s been in the financial markets.

Monday the world markets dropped enough to wipe out $5 trillion in wealth while the US markets were closed and Tuesday morning the US Federal Reserve dropped rates three quarters of a point.

Here in Canada they came down a quarter of a point that the banks did pass on, but there had been rumours that the no service mega banks were considering not lowering the prime rate.

While it was only a rumor that started back in December, there is no way to buy this kind of bad publicity is there? And how great that a number of media outlets, starting with columnist Greg Weston, brought this to the attention of the world.

The logic was that banks wouldn’t pass on the one-quarter point rate reduction to offset some of their rising expenses and that would include the billions of dollars some of them have lost in their subprime mortgage portfolio.

When the prime rate changes, it affects two-thirds of our borrowing costs, either directly or indirectly, for consumers and businesses. A lower rate is the Bank of Canada wanting to impact the economy, manufacturing, consumer spending and the dollar.

How dare the banks consider not moving down the prime at the same time? Isn’t it enough to keep charging us more and more interest, less and less competition and more service charges everywhere? Am I just cynical or are we supposed to cover some of their paper losses?

Just having this idea floated is another big reason to allow more competition in the banking field. In the U.S. there are about 3,000 financial institutions waking up each morning figuring out ways to bankrupt each other – that’s competition. Not the five we’ve got who want to merge into two or three.

But there’s good news in hearing banks might not change the rates. Because when we get mad – we get moving and there are alternatives for your financial needs:

For savings: ING right now is at 3.75%

For loans & mortgages: Credit unions are at or below the mega no service banks’ rates, are locally owned and run AND you’re a shareholder so you’ll get a large refund at the end of the year.

For RRSPs: Mine are with Primerica Financial. Many of their mutual funds have way better returns – and there are lots of other no-load no fee places to comparison shop.

Maybe this is another reminder to get informed because knowledge really is power and to remember to always always comparison shop. There are options and a lot of ways you can save interest and money.