Recently I was reading the CAAMP Annual State of the Residential Mortgage Market in Canada report and it stated the for borrowers who recently renewed a mortgage the average interest rate is now lower by .65% than the rates prior to renewal. Among borrowers who renewed, 61% saw their interest rate fall, 14% saw increases and 25% saw no change.
So if 61% saw a decrease in rate, and the average is .65%, this to me is says that the Canadian Public upon renew is still paying too much.
What am I thinking?
Recently my client go a renewal notice from the bank, it offered 3.99% for a 5 year mortgage, so yes it is lower than what they were paying but at the same time my best rate is 3.04%, so the difference is 0.94%. So the client calls, they get an offer of 3.29%, still too much, and why did the bank not offer them the best right upfront, they have been great clients for 5 years.
So in this case, we decide to move the mortgage to get a better rate. When the client calls to renew into an open mortgage (I do this just in case the timing does not work out and we want to make sure they do not get another closed term) the bank then offers to match my rate. Again I ask, why did the not offer the best rate from the beginning, they are good clients.
To me it comes down to what is fair. If you have been a client for the last 5 years and never missed a payment, why are you not offered the best rate from the beginning?