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Why Are You Paying Higher Interest Rates?

November 20, 2009

I was in a meeting last week with a global lender that is fairly new to the Ontario mortgage market. They wanted MonsterMortgage.ca’s opinion on a new mortgage product that they are going to launch in 2010. All good, the more choice for consumers the better so that you can get the best mortgage deal. During the meeting the CEO of the company threw out an interesting stat about mortgage renewals that blew me away…. 87% of all people that renew their mortgage renew it with their banks and 67% of those that renew with the bank actually renew above the posted rate. If you just take today’s average 5 year fixed rate as an example that means people are choosing to renew their mortgage at 5.75% vs. 3.99%….YOU HAVE TO ASK YOURSELF, WHY?!?!?!?. Break that down into real dollars and you can really start to see how Canadians are putting more money in their bank’s pockets and not their own when it comes to their mortage. Take a look at this example:

$100,000 mortgage
5 year fixed-rate @ 5.75% paid monthly = $625.02
5 year fixed-rate @ 4.09% paid monthly = $525.48
Amount contributed to the bank’s bottom line and not yours at the end of the 5 year term = $2477.18

Go to our mortgage calculator to plug in your numbers.

How do you make sure that you don’t make the same mistake as most Canadians? Remember these simple rules so that you can save money on your mortgage renewal:

  1. Be loyal to yourself not your bank
  2. Choose the best mortgage rate and terms from over 20 lenders NOT JUST ONE BANK
  3. Secure a four month low interest rate guarantee
  4. There is no cost to switch lenders