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Renewers, Have You Passed the Bank’s Laziness Test?

by David Larock

When your mortgage is approaching the end of its term, your lender will give you what I like to call the “laziness test”. Basically, they send you a renewal offer that promises a hassle-free renewal if you sign the letter and mail it back to them. The catch is that the offered interest rate is 1 to 1.5% higher than current competitive rates and the bank is hoping that you’ll be lazy, and not notice. It ends up being a very profitable tactic because amazingly, approximately 1/3rd of renewers actually take the offer! We as consumers have taught the banks that once we have an established relationship we develop a blind faith and will no longer shop their offers. Since it is well understood that the more products a consumer has with a bank the less likely they are to shop around, we shouldn’t be surprised that approches like the “laziness test” have been developed.

The best thing to do when you get a renewal offer is to call me, or any other independent mortgage agent. One of two things will happen: either we will help you secure a much lower rate at a different lender or, when your current lender realizes it acutally has to compete to keep your business, it will finally offer you the competitive rate you and I know should have been given to you in the first place. In either scenario, you’ll be glad you spoke with us and what’s more, you’ll pass their “laziness test” with flying colours!

David Larock is an independent full-time mortgage broker and industry insider. If you are purchasing, refinancing or renewing your mortgage, contact Dave or apply for a Mortgage Check-up to obtain the best available rates and terms.
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