A growing number of Canadians are negotiating lower than advertised rates, according to a survey conducted last month by CAAMP and Maritz. While advertised rates have averaged 5.65 per cent over the past year, Canadians who have opted for a five year, fixed-rate mortgage within that timeframe have managed to secure an average rate of 4.23 per cent, saving 1.42 per cent in interest payments over their term.
The Internet may be said to be one of the key influences in this statistic. Canadians are increasingly doing their mortgage research online; comparing quotes, terms and rates offered on various mortgage websites, utilizing Canadian mortgage rates comparison charts and online mortgage calculators.
Canadians have also picked up on the trend to refinance or renew their mortgage into a loan product offering a lower rate. CAAMP/Maritz data shows that the majority of those Canadians who renewed or refinanced their mortgage within the past year did so at a rate that was an average of 1.09 per cent lower than the rate they were paying on their mortgage previously. Seventeen per cent of all refinances or renewals involved switching lenders.
Canadians are illustrating that they are cognizant of the fact that mortgage products, like any valuable product or asset, must be shopped around for. Blindly signing your mortgage renewal without negotiating, or refinancing at a rate that is higher than the rate you had previously secured, is not the optimal decision to make.
Attaining a five-year fixed rate that is even one per cent lower than your first offer can save you thousands of dollars in interest payments, or decrease the time in which you will pay down your mortgage if you apply your interest savings to the principal loan amount, via a lump sum payment.
Shopping, inquiring and popping rates into a mortgage calculator are free, and timely thanks to the convenience of the Internet. Don’t waste the opportunity of your mortgage renewal date, and don’t accept the first rate you are offered. A mortgage broker will do this shopping for you, and find the lowest rate available to suit your mortgage needs. Get started early, because switching lenders can often involve time restraints and penalties.