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Canadians overpaying for mortgages if they choose big banks

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Staff Writer | February 14, 2019
Canada   Big bank mortgage rates were consistently the most expensive options

Loans from Canada's "Big Six" banks—RBC, TD, BMO, Scotiabank, CIBC, and National Bank of Canada—account for an overwhelming part of the mortgage market despite the fact that there are many alternative, often cheaper, options available to Canadians.

According to data compiled by, an online recommendation site for personal finance products like insurance, mortgages, loans and credit cards, big bank mortgage rates were consistently the most expensive options available to Canadians throughout 2018.

What's more, the lowest posted rates offered by Big Six banks were always more costly than the lowest rates available from smaller lenders.

Smaller lenders and brokers continually offer more affordable mortgage rates than those posted by banks.

Last month, for example, RBC announced it was decreasing its five-year fixed-rate mortgage to 3.74 percent.

With the bank's new rate, consumers would pay $2,560 per month on a $500,000 mortgage (assuming that a down payment of at least 20 percent was made when buying the home to avoid CMHC insurance, and a 25-year amortization period), but in the same buying scenario mapped onto the best currently available five-year fixed-rate mortgage—3.23 percent—monthly payments would be lowered to $2,426.

Over the course of the 25-year mortgage, $134 in monthly savings amounts to an additional $40,200.

Mortgage rates fluctuate based on the rates at which lenders, such as banks and other brokers, borrow money (often these lenders must borrow money to ensure they can meet the demands of consumers requiring mortgages).

If the rates that lenders borrow at falls, the rates that consumers borrow at should fall in conjunction.

However, with big banks, this often isn't the case.

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