Mortgage Pre-approvals...might be discontinued?
Pre-approvals and rate holds have been a standard offering with most lenders. I recently received a newsletter from a mortgage broker I work closely with in Toronto [Rosanna Younan from Premiere Mortgage Centre], informing me that two big lenders, TD and FirstLine (part of CIBC) have decided to stop pre-approvals within the broker channel. The big question is whether the majority of lenders will follow the lead.
Canadianmortgagetrends.com highlights some lender concerns regarding pre-approvals:
pre-approvals frequently don't close (less than 1/3 of pre-approvals close)
pre-approvals are expensive to process and the return for lenders is debateable. The lender is tying up human resources to process applications, as well as capital to hedge rates.
The next few weeks/months may see the trend continuing or lenders may start charging a rate premium on pre-approvals (presently the policy with a few).
Many good lenders are currently still offering preapprovals and more the reason for anyone considering a purchase or refinance, within the next 4 months, to arrange for a rate hold.
Would mortgage pre-approval/ rate hold become extinct?