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.