A Closer Look at the Investors Group 1.99% Mortgage: What You Need to Know
By Thomas Sigsworth – Sat, 2014-05-17 19:40
Investors Group roiled the Canadian mortgage market this week when it announced it was cutting its 36-month variable mortgage rate to 1.99 percent, the lowest rate offered to borrowers in more than two years. The move stunned many economists and prompted talk of a price war among lenders this summer. With all the buzz surrounding this mortgage product, we decided to dig a little deeper to make sure borrowers don’t get any surprises if they decide to sign up with Investors Group.
Great Rate, But Some Restrictions Apply
Epic, historic, bargain basement – whatever qualifier you want to use, the Investors Group three year variable rate mortgage at 1.99% is unquestionably a great deal. In fact, it’s currently 25 basis points below the next closest competitor!
A closer look at this mortgage promotion shows that it’s not for everyone, though – there are definitely some odd-ball restrictions that should flash caution signs for many borrowers.
Here are three that really stand out:
(1) No Early Breakage. With this mortgage, you are truly locked in – Investors Group only releases you from the loan if you sell your house, and even then, you’ll still have to pay a penalty. Forget about refinancing or switching lenders.
(2) A Lame Lock-In Option. IG says borrowers can lock in a fixed rate at any time – but they will only commit to converting borrowers to a “posted” fixed rate. Guess what: IG’s posted fixed rates are quite high and not even close to being market competitive. Most lenders offer discounted rates if you convert from variable to fixed. That pledge is conspicuously absent with this Investors Group promotion.
(3) The Promotion is Only Available Through an IG Mortgage Specialist. This rate only seems to be available to clients of IG who go through IG mortgage people. It’s not offered through mortgage brokerages, so Canadians won’t have the same kind of access to the rate as they would if it had come from a conventional lender. We’ve also heard that borrowers who do take the mortgage will be exposed to aggressive cross-selling. IG is best known for selling mutual funds and other investment products, so borrowers should be prepared to hear all about them if they decide to take the loan.