Canadians are considerably overpaying for their mortgages when they borrow from the Big Six institutions, according to a new study by online comparison portal LowestRates.ca.
For example, the RBC reduced its 5-year fixed-rate mortgage to 3.74% in January. The analysis found that this is noticeably higher than the best currently available 5-year fixed-rate term in the non-bank lending market, which has a 3.23% rate.
As the country’s leading banks are responsible for much of national mortgage volume, the situation is in all likelihood contributing to many Canadians’ fiscal burdens.
“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,” LowestRates.ca CEO and co-founder Justin Thouin cautioned.
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Indeed, the report found that there exists a running theme of the lowest mortgage rates offered by the Big Six all being costlier than those available from alternative lenders.
“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,” Thouin explained.
“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.”