Have you ever wondered why banks have posted mortgage rates, yet they’re willing to offer mortgages below these interest rates to some borrowers?

The Bank of Canada (BoC) wanted to find out how consumers can get the very best mortgage rate, which led to the undertaking of an extensive study on mortgage discounting. 

According to their research, Canadians who get the best mortgage rates are those who:

1. Bargain

• Research proves that bank profits “are significantly higher in haggle environments.” As a result, banks prefer not to put all of their cards on the table.
• This leads to “price discrimination”, whereby banks give better deals to skilled negotiators and well-informed borrowers.

2. Have larger mortgages

• “Since few negotiate the renewal of their mortgage… (this) provides lenders with an incentive to attract consumers with larger loans who have large outstanding balances at the time of renewal.” 

3. Use a mortgage broker

• The report states that brokers lower the “search costs” of getting multiple quotes. Multiple quotes (lower search costs) are strongly correlated with lower rates. 
• “Over the full sample, the average impact of a mortgage broker is to reduce rates by 17.5 basis points.”  That’s ~$1,670 of interest savings on a typical $200,000 mortgage over five years.
• Bank “mortgage specialists offer convenience to consumers, although they do not reduce search costs. This is because they work for one lender only.” 

Click here to read the working paper on the BoC study.

It’s important to understand that mortgage brokers can offer lower rates because of the large volume of mortgages we successfully fund with lenders each year. This enables mortgage brokers to offer our clients wholesale versus retail pricing.

And while mortgage brokers have access to hundreds of products available through dozens of lenders, when you approach a lender directly for a mortgage, that lender can only offer one line of mortgage products – their own.

As always, if you have questions about finding the right mortgage product and rate to suit your specific needs, I’m here to help!

While most Canadians spend a lot of time and expend a lot of effort in shopping for an initial mortgage, the same is generally not the case when looking at mortgage term renewals. Omitting proper consideration at the time of renewal costs Canadians thousands of extra dollars every year.

It’s important to never accept the first rate offer that your existing lender sends to you in the mail around renewal time. Without any negotiation, simply signing up for the market rate on a renewal will unnecessarily cost you a lot of extra money on your mortgage.

It would be my pleasure to have the lenders compete for your mortgage business at renewal time to ensure you receive the best mortgage options and rate catered to your specific needs. After all, just because a lender had the best available product or rate for you when you obtained a mortgage one, three or five years ago does not mean the same holds true in today’s market.

With products and rates changing on an ongoing basis, you can’t possibly know what the best offering is for your unique situation without having me – a mortgage professional – do some investigating on your behalf.

It’s my job to look at every rate and product change from each lender – including banks, trust companies and credit unions – every morning to ensure I find the best deals for my clients. I also have the inside scoop on specials available through dozens of lenders thanks to the large volume of business I fund through these lenders each year.

Often times, your existing lender will send a highball renewal rate to their existing clients in the hopes that you will simply sign the renewal form and send it back. Your best bet is to come to me prior to your renewal date or forward the lender’s renewal offer to me before signing anything. That way, you can rest assure you’re getting the best possible mortgage product and rate that suits both your current and future mortgage needs.

• We are Canada’s largest and fastest-growing mortgage brokerage!
• We have more than 1,900 Mortgage Professionals from more than 300 locations across the country!
• Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
• We work for you, not the lenders, so your best interests will always be our number one priority.
• We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
• We close loans in all 10 provinces and 3 territories.
• We can process your mortgage in as few as 7 days.
• We are the preferred mortgage lender for several of Canada’s top companies.
• Dominion Lending Centres’ Mortgage Professionals are available anytime, anywhere, evenings and weekends – and we’ll even come to you!