Canadians Not Doing Enough Mortgage Homework at Renewal

Three in five Canadians say they do “a lot” of research before choosing their mortgage, according to a recent Ipsos poll.

But when it comes to mortgage renewals, too many put in too little effort. Only 42% of renewal customers claim to do a lot of mortgage research. A disappointing 1 in 5 (22%) admit to doing no research at all.

That’s a real problem given that banks typically quote no better than subpar “special offer” rates on renewals. And we all know those rates aren’t “special.”

Some banks even try to sneak sky-high posted rates into their renewal letters. With only 1 in 3 mortgage consumers using rate comparison websites, and just 1 in 3 using mortgage brokers, too many fall easy prey to these tactics.

This data is all the more surprising given 90% of Canadians research home purchases on the web. Compare mortgages online, vacation longerHeck, even 63% of us take the time to compare hotel prices online, according to Ipsos.

To anyone saving a few hundred bucks on a hotel room but taking their lender’s first renewal offer, do yourself a favour and shop your mortgage diligently. You’ll save at least 10-20 basis points of interest—enough for one more vacation every mortgage term.


The Ipsos survey was commissioned by LowestRates.ca and based on a sample of 2,002 Canadians aged 18+. Participants were polled online between July 17 and 18, 2017.


5 Comments

  • Ralph Doncaster says:

    Most rate comparison sites suck. Lowrates.ca doesn’t list HSBC, which we know often has the lowest posted rates.

    • The Spy says:

      Agreed Ralph. If you don’t show the whole market you’re nothing more than a lead gen website, at the expense of your visitors.

      We decided long ago to forgo lead revenue and display all reputable competitive lenders/brokers, even if they don’t pay us. It continues to surprise me how no one else in Canada has copied this model.

  • Bill M says:

    It never ceases to amaze me how many people still fall for the big banks’ posted rates given all the rate information that is so easily accessible online. This may have been excusable 20 or even 10 years ago, but not today.

  • Jakob says:

    I feel like rate comparison sites cater a lot to initial mortgage buyers. When I shopped for my renewal, I was pretty much lost.

    There’s no “renewal” box to check. Mortgage size doesn’t reflect my current balance, but would the original mortgage still matter to lenders? How much will I pay in fees for discharging / transferring from the previous lender? What do you do when lenders don’t even mention renewals on their websites or comparison-aggregated blurbs? What’s that, renewing with a different lender resets my prepayment privileges from the renewed mortgage amount, not the original one?

    As a generally internet-savvy millenial (recently re-categorised as “Xennial”), I found that the internet was pretty useless to help me with this process, and talking to one or two brokers cleared up much of the confusion. I can see how people would get lost if they’re not already determined to get a good deal. RateSpy and others could be doing much more on this front.

    • The Spy says:

      Hi Jakob,

      Some interesting talking points here. A few thoughts…

      * The vast majority of lender rates apply to renewals unless you see a note stating otherwise (for example: “Rate applies to purchases only.”)

      * In the event you have valid default insurance still in force, you can port it to a new lender and often get the extra discounts which apply to “insured-only” rates.

      * The original mortgage balance generally doesn’t matter for renewal pricing.

      * Discharge fees can easily be confirmed with your lender but here’s a good overview from another comparison site: https://www.ratehub.ca/cost-of-refinancing

      * Renewing with a different lender reduces one’s prepayments a bit, but less than 1 out of 10 borrowers exercises their full prepayment privileges anyways so the rate savings generally trumps that factor.

      Regarding mortgage consumers getting lost online, imagine how lost they’d be if they didn’t have some objective benchmark of mortgage pricing. Imagine if they had to simply trust their bank or broker on rates with no point of reference.

      No doubt, mortgage comparison portals should (and will) improve the tools and information they offer consumers in years to come. But despite any shortcomings, there are few other single websites that can rival the mortgage savings afforded by the top rate sites.

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