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Friday, February 13, 2009

Wells Fargo introduces new mortgage product, rate breaks

| Tuesday, 10 February 2009


Wells Fargo Financial Canada announced changes to its rate structure February 2, and introduced a new open mortgage product in December to accommodate more borrowers.

The new rate structure allows brokers who make deals between $150,000 and $200,000 to knock 85 basis points off the interest rate. Deals over $300,000 see a rate decrease of 160 basis points.

“We realized that for the non-conforming clients, especially in urban centres where house prices tend to be a lot higher, it becomes more difficult to qualify, so we decided to lower interest rates on the higher deal sizes,” said Steve Malone, vice president of home plan operations at Wells Fargo Financial Canada. “We think it’s a unique approach and allows more opportunities for home ownership.”

The alternative lender also introduced a new open mortgage in December, which allows borrowers to increase interest rates on the loan by 50 basis points so they’re able to exit the mortgage at any time without a prepayment penalty. Malone said more than 50% of issued commitments switched to the open mortgage program in January.

“As a lot of non-conforming lenders are exiting the market, we’re making proactive changes,” he said. “Everybody seems to be scaling back in reaction to the conditions in the market – we still think there’s a lot of opportunity.”