Infamous for obscenely high internal management fees and back end loads, Investors Group today announced on its web site a new 1.99 floating rate mortgage available to trusting victims:
The Winnipeg-based financial services firm posted the rate on its website Tuesday, offering a 36-month term at a variable rate 101 basis points below IG’s current prime rate of three per cent.
“It’s probably something we may see more of,” Toronto mortgage broker Marcus Tzaferis said. “They offer it up so they can cross-sell their investment products…They get the opportunity to wrap you up and cross-sell their mutual funds and you’ll probably renew and pay an extra half a per cent for a five-year then,” he said. See: Investors Group unveils 3-year mortgage at 1.99%
This is a common tactic of financial sales firms to turn customers with little capital into customers with more capital by gutting any equity in the family home. Borrowing against one’s home to buy high risk financial products is a bad idea at the best of times, but doing so at 6-year highs in stock markets, in back-end loaded, high fee, no risk management products on a floating rate loan when rates can only go up–that is near certainly a recipe for financial suicide.
If you know anyone who is considering this kind of a sales pitch today, try your level best to alert them. Taking financial advice from the sales force is a well-worn path to pain and suffering. And depending on one’s age and time to recover, the losses can literally be life devastating.