We looked at the Best of the Best for Chequing Accounts and the Best of the Best for Savings Accounts, now we’re reviewing the bank websites and their special educational content.

All the big five banks include details about their various accounts, current mortgage rate info, tools like mortgage calculators and budget planning strategies, branch locators, and a search function to help you find what you’re looking for. But not all sites are created equal. Here’s what I think about each of the sites and their special features.

Bank of Montreal (BMO)

The site starts on a very busy home page that includes a search function at the top left and, below that, tabs for rates and “tools and calculators.” The later includes calculators for mortgage payments, TFSAs, loan payments, and retirement planning. Click on any and you’ll get a pop with a basic calculator tool that’s pretty easy to use.

For more detailed info, you’ll have to delve into the “Personal” section or select one of the somewhat cluttered options on the screen, like “Buying my first home,” which leads to a trove of information from a “Mortgage Basics” glossary to PDF worksheets you can printout for offline number crunching.

Special Feature - BMO customers can sign up for the bank’s MoneyLogic Guide, a free online budgeting tool that allows you to sync all your BMO accounts to track your monthly budget and savings goals. You can view your progress in charts and graphs, or download a PDF to print off.

Canadian Imperial Bank of Commerce (CIBC)

A cleaner homepage includes key links stacked at the left (Bank Accounts, Credit Cards, Mortages, Investing), a search at the top right, and timely reports from CIBC experts, like the four-page PDF, “Year End Tax Tips.”

Special Feature - CIBC’s Advice Centre – reached via a prominent tab at the top centre of the homepage – includes multiple video clips and articles on a broad range of topics, from “Reducing Your Debt” and “Home Ownership” to “Family Finances” and “Retirement Planning.”

Royal Bank of Canada (RBC)

RBC’s global reach (it’s the biggest of the Big Five) is evident right from the homepage which has separate tabs at the top for operations in Canada, the U.S., International, and Caribbean (which apparently isn’t considered “international”), and its various divisions – RBC Insurance, Capital Markets, Wealth Management, and so on. For all that, it lacks a search function on the homepage. The downside for users is that you have to dig deep to get the info you want.  The advice center is pretty good, but the videos are a bit too sales focused for my liking.

Special Feature - Most of us worry about our online security, but probably don’t do enough to protect ourselves. RBC has prominently placed a “Privacy and Security” section on the main page, with detailed advice on how to protect yourself online, avoid common scams, and prevent identity theft. There are even easy links for reporting a suspected phishing scam. (Though the guy who automatically pops up in the lower-left and starts telling you more…can be a bit jarring if you’re doing some late-night research.)

Scotiabank

Scotia’s site features the cleanest design – when visited in early December, the page was dominated by an image of an elderly gentleman with his grandkids. Above that, are seven dropdown menus, including credit cards, borrowing, and rates, that bring up multiple relevant tools and explanatory articles.

Special Feature - Scotia Online employs a mix of short articles and embedded YouTube clips to explain things, but it does seem a little more geared to specific details on the company’s products as opposed to more generic personal finance education. That said, highlights include an accessible glossary of banking terms, and a Future Value Calculator that lets you see how much a regular investment contribution will grow over 20 years at various estimated rates of return.

TD Canada Trust (TDCT)

If you have an aversion to green – the colour, not U.S. dollars – this site is not for you. (I counted four different shades.) But we’re here for financial advice. And TDCT does provide a lot; you just have to discover the “Planning” tab on the home page to find the info you’re looking for.

Special Feature - TDCT’s Planning section is the go-to part of their website for a broad range of financial advice. Articles range from overviews on how to organize your finances – and what you hope to achieve – to savings calculators to help you reach your goals. Back on the homepage, TDCT also includes a News link if you’re interested in getting the bank’s Daily Morning Market Update or signing up for RSS feeds.

Highlights from the not-so-big banks

Customers of PC Financial (a CIBC subsidiary, run through Loblaw grocery chain) can sign up for a monthly Financial Aisle Newsletter that includes tips like: “Remember that legitimate institutions will never ask you to confirm or to disclose personal financial information like PIN numbers or social insurance numbers over the internet.”

ING Direct has a number of online tools, including the Rent Translator that quickly shows what your monthly rent payment would equate to in terms of a mortgage, including a table that shows how much you’d pay it down year-by-year.

Anyone who’s opted to bank with Ally Canada will appreciate the icon at the top left of the page that tells you the wait-time for the telephone help line. It’s a lot quicker to log onto the site than punch in all your account info and follow the phone prompts only to discover “we’re currently experiencing higher than normal call volume…”

Shortly after we moved from the dating phase to the serious relationship stage of life, my then-girlfriend – now-wife – showed me a multifaceted spreadsheet she’d created to track expenses, a monthly budget to follow, and even a page to estimate our savings for vacations and the down payment on the house we’d eventually buy together. At the time, I teased her that she’d forgotten to plan for our funeral expenses but, in retrospect, I owe much of the lifestyle luxuries that I enjoy today – a car that works, a solid roof over our heads, and so on – to the fact that she was a forward-thinking planner. Now even if you’re not lucky enough to find someone like her to marry, there are a number of tools out there that can help you to create a budget and better manage your expenses.

Tracking expenses
Any financial planner – or credit counselor – will tell you that the first step to creating a budget that you’ll stick to is tracking your ongoing expenses for two or three months. And by “tracking your ongoing expenses,” I mean keeping track of every single thing you spend money on during that period. Start with the big-ticket items – rent or mortgage payments, insurance, utility bills, et cetera – add-in the recurring mid-range expenses such as groceries, gym memberships, and the like, but also keep track of seemingly little things like fast-food lunches, takeout coffees, magazines, and other impulse buys. You may be surprised by how much all those $3 lattes add up to in a month.

With hard numbers in hand, you can group them into appropriate categories (housing costs, entertainment, meals, et cetera) and start to assess areas where you may be able to realistically pare back and start building your nest egg. But if you’re not savvy enough to build your own tracking tools, check out the online options, many of which are free.

Free tools
Mint.com/canada, for example, will pull information directly from your online banking and credit card accounts and sorts it into appropriate categories automatically. (They stress that their system is “protected with bank-level security.”) The U.S.-based site launched in 2007, and has since added all the major Canadian banks and commercial credit cards to their lineup. You can view your progress online, or via their free apps for iPhone and Android devices.

Save your savings
If you’re an impulsive person, it may be hard to look at a growing bank balance and not be tempted to spend some of it. So, following the out-of-sight, out-of-mind principle, you may be better off setting up a separate account for your savings. If you’re saving for something like a trip where you’ll need to have relatively quick and easy access to the funds, consider opening a no-fee bank account where you’ll earn a modest amount of interest while your money slowly grows. If you’re planning on saving for something more long-term, like a home or car purchase, you may be better off with a secure, higher-interest bearing investment product like bonds or GICs.

Allan
Writer for RateSupermarket.ca

Last week we saw a few of the big banks lower their posted fixed mortgage rates by roughly 10 basis points (or 0.10%). The move was lead by RBC, and this week the remaining lenders followed suit.

The popular posted 5 year fixed rate went from 5.59% to 5.49%. This means that starting on June 6th the new qualifying rate will be 5.49%.

The qualifying rate is used when you apply for a variable or fixed rate mortgage with a term of five years or less. For example, if you apply for a 5 year variable mortgage at 2.05%, it is likely that the lender will require you to qualify at the higher rate of 5.49% (the ‘qualifying rate’). This is done to ensure that the borrower can handle mortgage payments if rates were to increase.

So although the qualifying rate might make it a bit harder to get a mortgage, it’s used for the benefit of both the borrower and lender. The borrower gets approved for a mortgage that they are more likely to be able to afford in the long run and the lender has a bit more security in knowing that the borrower wont default on payments.

It seems that the major banks come up with a new and different mortgage product all the time. While it’s good that they’re trying to create new products for different types of consumers, the products themselves aren’t always easy to understand. Let’s take a closer look at two unique products, a blended mortgage and a rate capper mortgage.

What is a blended mortgage?

You’ve been diligently paying your mortgage down for years. Over the years, you have made renovations that have substantially increased the value of your home. You are thinking about purchasing a cottage. You have minor credit card debt, and a line of credit. You are also saving for your daughter’s post-secondary education. All this, and you hope to pay off your home within the next fifteen years.

Does this sound like you? A blended mortgage could be the solution – but first let’s explore just what it is and whether or not it’s the right option for you.

A blended mortgage allows you to borrow against or increase the amount of your present mortgage. It allows you to free up equity, so that you can make necessary renovations, or purchase a second property. This is a particularly good option if your present mortgage has a low interest rate, or you wish to avoid the mortgage penalty incurred by switching.

With a blended mortgage you keep the balance of the mortgage interest rate you have at present, while the new total is charged at the current rates. Because you are still following the terms of your mortgage contract, there is no penalty. There are a number of different types of blended mortgages, but typically they fall into one of two categories: blend and increase, or blend and extend.

Blend and Increase

This blend allows you to increase your existing mortgage. It lets you to use the equity you’ve built through paying your mortgage down or increasing the value of your home. Funds you receive will be at current mortgage rates. With the extra funds you can pay off high-interest credit card debt or your car loan.

Blend and Extend

After you have decided to increase your mortgage, you may also think about renewing to a five-year term earlier than expected. This is known as a blend and extend. Say you have a mortgage of $125,000 at 3.69% for a term of 3 years. Current rates are 5.69%, so you decide to extend your mortgage term to 5 years. This extension gives you an interest rate of 4.49% for a new five-year term. Ask your mortgage specialist about this option. It may save you money.

Scotia Total Equity Plan (STEP)

Scotiabank’s STEP program allows you to split your mortgage between fixed and variable rate products, or between short and long-term products. They tout it as a “great way to take advantage of low interest rates in the short term, while protecting against increases over the long-term.” STEP allows you to turn your mortgage into usable income by making it easier to free up funds for your personal needs. Once the program is in place, it allows you to borrow up to 80% of the value of your home, while choosing from the range of Scotiabank products. You can even split your mortgage into 3 different mortgages, allowing you to manage your interest rate risk. The purpose is to help you lower your overall borrowing costs.

The downside: Scotiabank’s STEP mortgage is reportedly difficult to get out of penalty-free. There are a number of consumer reports which detail hard-luck stories about enormous penalties charged to those who want to get out of their contracts early. For the undisciplined consumer, freeing up space on credit cards could lead to further over-spending. If you fall into either one of these categories, Scotiabank’s STEP product might not be for you. Before making any major financial decisions, it’s always a good idea to evaluate what type of spender you are and make sure you read the fine print before signing any contract.

Rate Capper Mortgages

Basically, a rate capper mortgage combines a low short-term interest rate with the security of a capped long-term interest rate. For a period of five years the interest that you pay will fluctuate with Prime (the same way that a variable mortgage does), but this interest is capped at certain rate, so you know what your maximum payment could be. Your monthly payments stay the same throughout the term. Your interest rate varies on a monthly basis and is calculated based on your bank’s Prime Rate terms. Each bank has different terms, so it’s always a good idea to compare rates. Here are a couple of examples of rate capper mortgages:

RBC’s RateCapper Mortgage

With RBC’s RateCapper mortgage, your payment amount remains fixed, but the interest rate itself will fluctuate with changes to their prime interest rate. This means that the amount that goes toward paying your principal changes monthly, but your payment remains the same. The benefit is that you always know what you have to pay, allowing you to budget better. It also allows you to take advantage of the lower rates offered to variable rate mortgage clients.

The downside: It’s more difficult to keep track of exactly how much of your payment is going toward your principal. The current variable rate offered is Prime + 0.00%, which is higher than a full variable mortgage that you can currently get for as low as Prime -.90%. Also, the 5 year capped rate is at 6.75%, which is also higher than current 5 year fixed rates at roughly 3.65% – 4.04%. So you certainly pay a premium for this type of product flexibility.

National Bank’s Capped-Rate Mortgage

National Bank of Canada has a very similar product to RBC. Its product features a closed, 5-year term at prime +0.00%. The main difference is that the capped rate is the 5-year rate at the time of signing (5.69% today), which is lower than RBC’s RateCapper. If the capped rate is reached and the rate continues to rise, your rate will stay at the capped rate. This product is said to facilitate better budgeting and allows you to pay more toward your principal.

The downside: Similar to RBC’s downside, it’s more difficult knowing how much of your principal you’re paying down and you’ll always pay a premium on the rates offered for this type of flexibility.

Conclusion

Whatever your preference, it’s always a good idea to do your research, compare mortgage rates and products, and talk to a mortgage professional. Most importantly, you need to know yourself and the type of spender you are. You shouldn’t have to accommodate your mortgage – choose a mortgage that’s specifically tailored to meet your needs.

Melanie
Writer for RateSupermarket.ca

RBC just announced a decrease to their residential mortgage rates.

Bond yields have been dropping over the past few weeks, so this change doesn’t come as too much of a surprise.  However, most of our Mortgage Rate Outlook Panel members thought that rates would remain level given the continued strength in the economy.   But with the price of oil climbing each day, and the unrest in the Middle East not expected to lighten up, it’s a sign that bond yields are likely stay low.

The below RBC mortgage rate changes are expected to take effect Wednesday March 16th, 2011.

Special Fixed Rate Offers*

* The rates indicated are special discounted rates and are not the posted rates of Royal Bank of Canada. Special Offers may be changed, withdrawn or extended at any time, without notice. Not available in combination with any other rate discounts, offers or promotions.

RBC is normally the leader when it comes to making a change to posted mortgage rates. We can expect the other banks to follow suit over the next week or so.

RBC announced that they are increasing some of their discounted or special mortgage rate offers effective tomorrow December 15, 2010. Interestingly, the equivalent posted fixed mortgage rates are staying the same.

This is an usual move as typically the posted and discounted mortgage rates used by the banks move in tandem. You can expect the other banks to follow suit this week.

Many of the banks have been advertising more aggressive rates in the past few months as the housing market slows down and they are fighting over fewer and fewer new clients. This has lead to a larger than normal spread between posted mortgage rates and special offer rates. This latest increase by RBC reduces the spread and brings it closer to historical norms.

One of the reasons that mortgage lenders want to keep posted rates lower, is that with the new mortgage regulations, the posted 5 year fixed mortgage rate is used to qualify borrowers looking for shorter fixed term and variable mortgage rates. So the lower this rate is the more customers that can qualify for a mortgage.

Here are the latest RBC mortgage rate changes:

RBC announced that effective this morning, November 9, 2010, they are lowering their 5 year fixed mortgage by 0.10%. This drops their posted 5 year fixed mortgage rate to 5.19%, and a quick check at the Bank of Canada website confirms that this is the lowest 5 year posted fixed mortgage rate in the last 10 years. The previous low was 5.25%, reached in May 2009.

The interesting point is that, as fixed rates are mainly influenced by Canadian government bond yields and move in tandem with these yields, this fixed mortgage rate decrease comes as bond yields have gone up, as shown in the chart below.

Source: Bloomberg

From the 6 month low of 1.859% on Oct 19, 2010, the 5 year government bond yield has increased 13% as of yesterday’s close 2.103. This would typically indicate mortgage lenders would be more inclined to increase rates rather than drop them, as their cost of funds has gone up. Nonetheless, this is great news for consumers and this mortgage rate trend, could signal a more aggressive rate strategy by the banks. Many people thought that as most of the major banks fiscal year ends were in October the rate battle may subside as there is no need for a late push to hit funding and performance targets. However, as housing sales decrease there are less mortgage customers out there, and lenders are fighting for new business.

Mortgage rates have continued at all time lows this month with the best 5 year fixed rates at 3.39% for a 45 day quick close, and 3.49% for a full featured mortgage. The best variable rate right now is 2.09% which you can view here.

It will be very interesting to see if other mortgage lenders follow RBC’s lead, or if they’ll stand pat, and see how their move plays out. More to come….

Banks tighten their belts

There’s nothing like a bit of mortgage rate activity to get Canadians out of a post turkey daze.

This week, all of the big banks have announced decreases to fixed mortgage rates. RBC was the first one to drop rates by 10 basis points, quickly followed by Scotiabank, TD and BMO. CIBC announced today that they would follow suit as well. This puts the popular 5 year fixed rate at 5.29%.

Fixed mortgage rates are affected by the Bank of Canada bond yields for the same term. Since the middle of September we’ve seen bond yield drop steadily. At the beginning of October, it was evident that yields had decreased, but few experts expected the banks to react by lowering fixed mortgage rates.

Our Mortgage Rate Outlook Panel of experts felt strongly that lenders had already tightened their belts enough by squeezing margins, and that any extra decreases were unlikely.

Since then, the US has confirmed sinking consumer confidence, decreased job creation, soaring commercial vacancies, and a decision by some of the largest mortgage lenders to freeze foreclosures on residential properties. The Canadian outlook seems to be moving along (albeit at a slow pace), but without decent recovery from our largest trading partner, we’re limited in terms of growth.

So as the banks pull their belts a little bit tighter this week (most of us would find that very difficult following the Thanksgiving weekend), consumers are rewarded with incredibly low fixed mortgage rates.

PS. RateSupermarket.ca is currently showing a 5 year fixed rate of 3.39% (Oct 13th, 2010). This is a full service mortgage offered by a chartered bank. Get it now – we don’t know how long it will last!

Mortgage shoppers have even more reason to celebrate this month as fixed mortgage rates have dropped again. For the 4th time in the past month many of the big banks including RBC, TD and CIBC have dropped their 4 and 5 year fixed rates by 0.10%.

Fixed rates are heading lower as their main influence, Government bond yields, continue to dive as the benchmark 5 year bond yield is down 5.3% just today to 2.028 at 10.30am on August 24, 2008. With the spread between bond yields and fixed mortgage rates increasing, looking at historic spreads, there is room for fixed rates to fall even further.

Interestingly, RBC and TD only issued press releases saying their discounted fixed rates were heading lower while the posted 5 year fixed rates were decreased on their websites.

Could this be a shift where the big banks start to advertise more based on rate? The first signs of this was a few months back when BMO had a big marketing where they were proactively advertising their 5 year discounted 5 year fixed rate in print, TV etc. This was a change in direction for a of big bank mortgage lender to advertise on rate. Another change in strategic direction is CIBC’s now long-running campaign incentivizing home owners to ‘Switch’ to CIBC with higher air miles and cash back.

Where customer loyalty is the ultimate goal amongst the big banks pushing for a greater ‘share of customer’s wallet’, CIBC actively asking customers to switch shows a change in direction in the market and hopefully a change in Canadian consumer behaviour. Many home owners can save money by simply comparing the market and seeing what other offers are out there to access lower mortgage rates and we hope to help this trend continue.

Here are the latest fixed mortgage rate changes:

RBC fixed mortgage rates changes

TD fixed mortgage rates changes

CIBC fixed mortgage rates changes

You can compare mortgage rates here to see how these stand against brokers and credit unions.

Well some good news today for first time home buyers and home owners as fixed mortgage rates dropped again as RBC, CIBC, Scotiabank and Laurentian Bank announced the latest mortgage rate changes of -0.10% for most fixed rates. These new lower rates take effect today, August 17, 2010.

This comes on the heels of the latest CREA report that showed national home sales and house prices declined significantly last month. Seasonally adjusted home sales activity across Canada declined 6.8% from June and down 30% than July 2009.The Prairies and Quebec were level while BC (-14%) and Ontario (-8%) accounted for 85% of the change across the country.

Year to date transactions are still up 5.6% compared to the first 7 months of 2009, although it’s believed that many transactions were brought forward due to HST in BC & Ontario as well as lower mortgage rates. This gap is expected to close and eventually decline through the rest of the year. CREA’s President commented, “Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals.”

Average home prices in Canada in July 2010 was $330,351 (+1% year on year) edging up one% from the same month last year.
Supply has also increased based on the number of months of inventory it would take to sell houses listed on MLS based on the current sales rate, as this stands at 7 months last month which is up from 4.5 months last year.

Fixed mortgage rates are heading lower as Government of Canada bond yields have been declining recently. We’ve seen the benchmark 5 year bond yield drop by 14% in the past month and 6.6% just in August.

You can read about what our Mortgage Rate Outlook Panel of experts believe mortgage rate trends are heading.

Here’s a run down of the updated rates by bank:

RBC fixed mortgage rates changes

CIBC fixed mortgage rates changes

Scotiabank fixed mortgage rates changes

You can these bank compare mortgage rates against the rest of the market here.