Mortgages from banks are more costly than alternatives

Mortgages from banks are more costly than alternatives

Mortgages from banks are more costly than alternatives

The lowest mortgage rates offered by the country’s leading banks are uniformly higher-priced than those available from alternative lenders, according to a new analysis by online comparison portal LowestRates.ca.

Combined with the fact that Canada’s “Big Six” banks account for a vast majority of the national mortgage market, the situation is contributing to a significant portion of consumers’ fiscal grief – and they might not even realize it.

“Brokers and smaller lenders often drop their rates first to be more competitive, and banks are slower to implement changes because they know they own the market,” LowestRates.ca CEO and co-founder Justin Thouin said.

“This will only change when Canadians realize they’re being overcharged and begin to shift away from the banks, and that will only happen as we increase awareness about the alternative market. The best deals are found online, not in your family’s legacy bank branch.”

Read more: Alternative financing increasingly popular in Ottawa

For instance, in January, RBC cut its 5-year fixed-rate mortgage to 3.74%, but LowestRates.ca found that the best currently available 5-year fixed-rate term in the non-bank lending market boasts of a 3.23% rate.

“The big banks never offer the lowest posted rates on the market, but Canadians aren’t spending enough time researching rates before signing their mortgages, and that’s potentially costing them thousands of dollars a year,” Thouin warned.

 

3 Comments
  • Jim 2019-02-14 9:04:15 AM
    This is a ridiculously flawed study. It compares published bank rates to high-ratio insured rates. I can't believe the media picked up this trash. Banks' unpublished rates beat brokers all day long, especially on uninsured mortgages.
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  • Karen Lagore, Accredited Mortgage Professional, 2019-02-14 11:16:33 AM
    I don’t agree with you Jim! I have personally worked for one of the big six, for 30 years and now work as a mortgage broker for Dominion Lending Centres, and banks definitely charge higher interest rates! You have to compare apples to apples and yes, banks have become more aggressive but in most cases we can beat their rates. Brokers have discounted rates because of our high volumes. Besides that, our services are free to the purchaser, and we are available 24/7. I would never go through a bank in my wildest dreams. My money is better spent going through the broker channel!
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  • Bob 2019-02-19 10:16:43 AM
    I would have to agree with you Karen. I don't believe Jim understand how banks, credit unions and mono-line lenders vary from one another. Another great point is that Banks and credit unions penalty can be much higher than a mono-line since they factor original posted rates and current posted rates into IRD calculation of a fixed term. On average mortgages are broken early 3.5 years into a 5 years for many reasons. Broker/agents have more credibility in the industry when it comes to bank reps as well as they have to obtain provincial license to provide advice and service. Is Jim aware that banks reps are not licensed and only protected by the institution?
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