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In today's economic climate, Canadians are no strangers to adjusting their spending habits to cope with rising costs. From groceries to telecommunications bills, savvy consumers
are quick to hunt for bargains and switch to lower-cost options. Surprisingly, however, many are missing out on substantial savings when it comes to their single largest transaction: their mortgage.
Recent findings from Mortgage Professionals Canada reveal a concerning trend: a significant number of Canadian homeowners are accepting the initial mortgage renewal rates offered by their lenders without negotiation. In fact, 41% of borrowers opted for the first rate presented to them, a notable increase from previous years. Even more concerning is the decline in aggressive negotiation tactics, with only 8% of borrowers significantly haggling for a better deal compared to 16% just a year ago.
Robert Jennings of East Coast Mortgage Broker in St. John’s, Newfoundland, expresses frustration at these statistics, highlighting the potential savings Canadians could achieve by exploring their options. He notes that many borrowers may not realize that mortgage rates are negotiable, and suggests that some lenders might not offer their best rates upfront, prompting borrowers to seek better deals elsewhere.
The financial impact of securing a lower mortgage rate can be substantial. For instance, a borrower with a $450,000 mortgage could save significantly each month and reduce their total interest payments over the term of the loan by thousands of dollars simply by switching to a lower rate.
Several factors contribute to this reluctance to negotiate. Fear and uncertainty about economic conditions, coupled with financial stress among many mortgage holders, often deter borrowers from seeking better terms. However, experts like Ron Butler from Butler Mortgages in Toronto argue that contrary to survey findings, many borrowers do negotiate, often successfully securing competitive rates and staying with their existing lender.
The key takeaway is clear: when it comes time to renew your mortgage, don't settle for the first offer. By doing your research, shopping around, and possibly working with a mortgage broker, you can uncover better deals that could save you significant sums of money over the life of your mortgage. With ample online resources and professional guidance available, there's no reason not to explore your options thoroughly.
This blog is based on the article "Canadians Leaving Money on the Table by Not Negotiating Their Mortgage Renewal Rates" from Canadian Mortgage Trends.