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Comparing bank mortgage rates
Content last updated: April 21, 2020
Whether you’re considering using a bank or broker, a variable or fixed mortgage rate, from one to a ten year term, Ratehub.ca sources the best mortgage rates for every category and type of lender. Ratehub.ca is a neutral source, so we’re able to provide you with unbiased guidance and education on obtaining the best mortgage to suit your needs.
Why do banks offer different mortgage rates?
Not all banks offer the same mortgage rates – in fact, some banks can advertise very different mortgage rates for what is otherwise the same product. For example, a TD mortgage rate with a 5-year fixed term may be 0.5% lower than the BMO mortgage rate in the same category (or vice versa).
Why is this the case? Well, it’s because each bank has a different lending criteria, and is comfortable with different amounts of risk. Factors like desired market share, competition, and marketing policy will all change a bank’s pricing strategy. This is why you need to shop around and compare rates from multiple banks whenever you get a new mortgage, renew your mortgage, or refinance.
Posted rates vs. best rates
When comparing bank mortgage rates, it’s important to know that these rates represent the banks’ posted mortgage rates. The posted rate is simply the rate that the bank is advertising publicly. However, banks often have the capacity to offer lower rates, which you can access either through negotiation or reaching out to a representative mortgage broker. Some banks offer rates several percentage points below what is posted, so do not get locked in to a higher market rate than is obtainable.
Bank rates vs. broker rates
As you may have noticed, bank mortgage rates are almost always higher than those of a mortgage broker. That is because mortgage brokers have access to rates from multiple banks and credit unions, as well as insurance and trust companies, so they can essentially “shop around” for you. Brokers also receive discounts from lenders based on the high volume of their business, which they then pass along to you.
As a result, it’s highly unlikely a bank will post a lower rate than a mortgage broker. However, if you present the lowest market rate to your bank as part of the negotiation process, they may offer to match it. That said, we don’t recommend plotting the banks and brokers against each other to compete for your business. What we do recommend is comparing broker mortgage rates and bank mortgage rates alongside each other, and deciding which offer is best for you.