Posted Rates vs Actual Rates

The universal rate factors to keep in mind.

When you see a low rate, consider it a 'range' rather than a singular number. Despite the rate advertised, you may end up with a slightly higher rate due to universal factors that can impact the actual rate you're offered.

You'll notice that a low rate is usually starting 'from,' indicating the low-rate range starts from there up.

Getting the lowest advertised rate you see (with any lender) can depend on:

• Qualifying through the required federal mortgage stress test minimum rate of 5.25% OR your rate plus 2.0% (whichever is higher)
• Your financial info, such as income, debt load, home equity (if you already own), and credit standing
• Your mortgage details, like remaining mortgage balance, home purchase price, or whether you need an insured or uninsured mortgage

The idea, however, should be that most good credit clients will be able to get the lowest rate in the range.

The lowest rates get the spotlight.

A mind-boggling array of mortgage options and rates are available in the mortgage lending space.

All the 'lowest' rates can't possibly be advertised for each scenario that may match a client's unique situation.

So, due to competition between lenders and other 'mortgage' players (like rate-comparison sites), the most popular, lowest-priced, and most-sold mortgage products are typically the rates you see advertised — which tend to be insured mortgages for good credit clients.

They're still a decent benchmark for measuring the current mortgage market and you'll likely still get a deal for the mortgage that suits your needs and details (depending on the source of the rate).

Not all 'low' advertised rates mean the same thing for your actual rate.

It's important to consider the source of the low advertised rate you see, and what you're getting with that rate to ensure it can genuinely save you money compared to another rate.

Here's that deeper dive we promised:

Rate Comparison Sites

Lowest Lender Rates Available? Or 'Bait and Switch'?

Sites that show rate comparisons among many lenders may not be the actual rates those lenders offer.

How do you know? Go to the lender's website to see if that same rate offer is being promoted. If it doesn't match, it's a rate that the rate site uses to catch your attention rather than help you save.

(Some of these sites don't even reveal the lender that has the rate, just the rate, hoping you'll click on it.)

Many of these sites offer 'low rates' for 'lead generation,' which pulls you in with an incredible-looking rate and charges the lender for the lead.

But when you fill out their form and eventually get connected to a broker (or lender), you'll find the rate isn't what you thought. Not because your universal details impacted your actual rate offered, but possibly because that rate wasn't 'real' in the first place.

Or, sometimes, these rates are 'ultra-low' because they have restrictions (like a bona fide sale clause) or hidden costs (like monthly interest compounding for a variable rate rather than semi-monthly) that you may not know about until it's too late.

What are some things to ask about when comparing rates?

• Does the rate come with flexible mortgage features, like good pre-payment privileges?
• Are there hidden wire or admin fees, or fees charged for certain changes, like adjusting your payment frequency or recasting your mortgage?
• What about any restrictions that limit your ability to end your term or come with higher charges?
• For variable rates, does the lender compound your interest monthly instead of semi-monthly?
• Are the rates for insured or uninsured (conventional) mortgages?
• Are you a good credit client looking for an insured mortgage, and you can't get the rate? That's an indication that the rate wasn't really there.
• Is the low rate you see available only for a particular region (like the province of Ontario) rather than Canada-wide?
• Does the rate source guarantee your best rate?

The Big Banks

Posted Rates vs Promotional (or Special) Rates

The major banks advertise their rates differently than we do — they have posted rates and promotional or special rates.

Whereas we advertise our lowest rates to give you your lowest rate for your situation, they keep their rates higher (and sometimes offer cash rebates to entice you, even though you may still pay more in the end).

Part of the reason they need to keep their rates higher is the extra costs they need to cover due to their behemoth size and cumbersome IT systems (compared to an MFC lender like our in-house THINK Financial, which only focuses on mortgages).

Big Bank posted rates are high for (mainly) 2 reasons:

1. You think you're getting a deal with their promotional rates. Ever tried to negotiate with your bank? You likely didn't get much budge on the first rate they offered. Perhaps they went a step beyond 'promotional' rates to offer you 'preferred client' rates.
   
   But their rates are likely still higher than the rates we can offer you (after our volume discount). And if you can get a better rate somewhere else, you'd probably 'prefer' that rate.
   
   
2. To discourage you from breaking your term. If you want to switch lenders or refinance, the 'discount' from the posted rate you received for your actual rate can be turned back around — and used to charge you higher IRD penalties (Interest Rate Differential).
   
   For example, if the posted rates was 7.5%, and you got a 5-year rate of 5.5% if rates haven't changed when you want to break, that discount of 2% will be factored into the penalty on your mortgage balance for your remaining term.
   
   The greater the rate difference between the posted rate when you first got your mortgage and their current 'promotional' rate at the time you break, the higher your penalty will be.

Banks get a lot of repeat business through blind customer loyalty. Many clients will simply go to their bank and sign a mortgage or renewal document without either negotiating or checking around for better rates.

Want your best rate when it's time to renew? Get a helpful reminder here.

True North Mortgage

How does True North Mortgage treat advertised rates?

When we advertise low rates, there's a good chance you can walk away with it.

We believe in transparency. True North Mortgage purposely advertises rates that we feel a good portion of our mortgage applicants will be able to get (because that leads to happy clients).

For the lowest rates to apply, that's typically a good-credit client with the right down payment amount and a reasonable mortgage timeline (for purchasing, renewal, or refinancing).

But if they don't fit in that exact box, our range of low rates means we can still help them find their best-possible rate for their situation, saving them thousands over their terms compared to another rate from another source.

When we promote a very-low rate product, like our short-term fixed Rate Relief™ mortgages (designed to offer a budget break now to hopefully renew into better market rates when they've dropped) — we're very upfront about its conditions and the mortgage client they're best suited for.

Compared to Rate-Comparison sites

True North Mortgage doesn't advertise 'bait and switch' rates.

• We're genuine with clients and don't misrepresent rate offers. We provide a realistic range and quickly let them know whether aspects of their application will impact their actual rate. (The most common reason we can't offer a client the lowest advertised rate is mortgage default insurance.)

• We continually search rate-comparison sites to ensure that our rates aren't being misrepresented (it's one of our pet peeves).

• We have real rates, not bait-and-switch rates. We pride ourselves on offering clients the most competitive rates in the mortgage market that help them save thousands.

Compared to the Big Banks

We don't use 'posted' rates. And we are way more flexible on rates and mortgage solutions.

• Our volume rate discount helps us provide lower rates, sometimes from your own bank.
• As a broker, our lowest rate offers can change depending on the lender offering them.
• As an MFC lender (Mortgage Finance Corporation), our rates are on average 0.20% lower due to lower overhead and costs, plus we have fewer fees and more flexible mortgage options.
• Our low rates for THINK Financial mortgages come with lower penalty calculations (should you need to break your term) based on market rates, not higher 'posted' rates.

And, even though we help you get your best actual rate, there's no cost and no obligation to use our expert brokers.

The best way to get your lowest rate possible?

Well, that's an easy one. You can absolutely talk to your bank about your rate, but then, check back with us.

Or, just talk to us in the first place, because we can often get a better rate from your own bank anyway. That's why we shop the lenders for you.

A few minutes with us may just save you thousands. You may even get a better mortgage fit with your great rate.

Our salaried (non-commissioned) expert brokers will provide completely unbiased advice, at no cost to you. And, they'll set out all the numbers so that you can make a clear decision.

Want to know your exact rate? Easily apply now, and we'll quickly help you find out.

Or give us a shout. We're here as your better mortgage choice.