Don’t judge a bank’s mortgage by its hyped-up rate
Don’t buy the hype. For the best mortgage deals as defined by low rates and favourable terms, see a mortgage broker. You may still end up doing business with your bank, but failing to at least consult a broker is borderline personal-finance negligence.
As spring is upon us, the lowering of a bank's rate to many uninformed Canadians is what looks like a bold mortgage move. The latest rate drop to make headlines was the 2.79% 5 year fixed rate that many banks have lowered to. Many mortgage brokers across Canada have been offering rates ranged from 2.69% to 2.74% for weeks before the latest headlines. In addition to lower rates, the products brokers have been obtaining for their clients have had comparatively lighter penalties if you had to break your mortgage before it's maturity date. Another key benefit that those who've worked with brokers tend to obtain in their mortgage product is the higher pre-payment privileges.
30% of outstanding mortgages were arranged by mortgage brokers in 2014, up from 23% in 2009, according to the Canadian Association of Accredited Mortgage Professionals. The bank's dominance is slipping, but slowly. By creating an illusion of daring competitiveness, the banks keep customers coming back.
Many of these same banks currently making headlines work with brokers, and have been offering lower than advertised rates for clients with good credit histories. Banks do not maximize profits by advertising its lowest discretionary rates.