Mortgage brokers drive mortgage rates down by 17.5%

A 2011 Bank of Canada study said that “the average impact of a mortgage broker is to reduce rates by 17.5 basis points.”  In fact, controlling for certain variables such as borrower income, they actually found that “borrowers using a mortgage broker got a discount of approximately 32 basis points.” (See the study here, pages 27-30). Want to know how using a mortgage broker reduces your rate?

Why does using a mortgage broker save you money?

Simple. It’s competition. Just like when you shop for a car, and the first dealer gives you their “best” price, the next dealer, knowing that you’ve been elsewhere, gives you a slightly better price. Then the fun begins. You go back to the first dealer, and magically, you get a new, even better, “best” price. You can go back and forth between them several times before you really get to the last, lowest, price.

Similarly, you can get your mortgage rate down, by going through the effort of bank branch to bank branch, and checking online, and putting in a lot of effort. If you use a mortgage broker, we do the mortgage rate shopping for you. We deal with dozens of lenders. Lenders know that when they’re dealing with a mortgage broker, the competition is built in. They know they need to give the best rate from the beginning. As the Bank of Canada researchers concluded, “brokers are a significant factor in driving discounts.”

Is there a hidden cost with using a mortgage broker?

The short answer:  Nope.

The long answer:  The lender pays us, not you. If it turns out that your financial situation is best served by an alternative lender, or a private lender, any fees, if applicable are discussed up front. I NEVER surprise clients with a hidden mortgage broker fee.

Is mortgage rate discounting the only benefit of a broker?

It’s not the only benefit. There’s more!

In putting together your mortgage plan, I consider your full financial picture. Together, we discuss your financial goals, job situation, personal plans. I explain fixed versus variable rate mortgage options, pre-payment privileges that you might want to take advantage of, and the types of lenders you’re most comfortable with. We look at the effects of timing on your home purchase, and the impact of increasing or decreasing your down payment. I want you to feel totally confident in the mortgage decisions you make, and to give you the tools to make informed mortgage choices.

Get a free assessment of your mortgage readiness

Want to know more about your mortgage options? Get in touch with me for a free, no obligation assessment. I’d be happy to help.

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