Back in September, we took a look at ING Direct's new broker rate hold technology. It’s essentially an instant way to lock in a rate by providing the client’s name, email, phone number, and mortgage amount.
ING’s broker rate holds have been incredibly popular, with over 3,000 rate holds submitted since August.
ING also allows the general public to get their own rate holds (via this web page). Rate holds for retail customers launched last March, on a pilot basis.
ING is currently the only lender in Canada that lets clients get their own rate holds online--without speaking to anyone. Since ING “owns” this market, it’s an absolutely brilliant strategy. There is currently no easier way to protect yourself from rising rates while you shop around for the best mortgage deal.
One big problem with pre-approvals, however, is adverse selection. Adverse selection is a situation where the lender is disadvantaged because customers tend to close pre-approvals only if rates go up. But Martin Beaudry, Vice President, Retail Lending at ING DIRECT (pictured on the left) says it’s a tolerable tradeoff. “We have a good handle on the conversion of Rate Holds to real applications,” he says.
Martin notes that ING also has good control over hedging costs—which are another big concern of lenders who offer pre-approvals and rate holds. He says, “ING DIRECT has a very robust risk management process that includes a number of hedging strategies.”
Here are a few other miscellaneous “did-you-knows” about ING rate holds:
- Clients can have only one rate hold at one time, but they can be reset any time by calling ING.
- Resetting a rate hold starts the 120-day rate guarantee period all over again. The client then receives a new guarantee based on the rate available that day.
- New rate holds can be requested when old ones expire.
- If a homeowner gets his or her own rate hold, he or she can still do business with a broker. The broker simply needs to refer to the client’s rate hold confirmation number in the broker’s application.
It’s important to remember that rate holds do NOT assure you of getting approved for a mortgage. All they do is hold a rate. Therefore, if you have any questions about your ability to qualify, the best bet is to first talk with a mortgage planner and have him or her pre-qualify you.