Are Toronto Mortgage Rates the Lowest in Canada?
Are Toronto Mortgage Rates the Lowest in Canada?
The Toronto mortgage market is one of the most competitive in Canada, with many lenders
vying for business and providing low rates to win it. Since the outbreak began, lenders have
been competing for customers by lowering their rates to keep up with the competition. This has
led to some of the lowest mortgage rates Toronto has ever seen, as low as 1.6%.
Mortgage products are hard to differentiate, so homebuyers focus on interest rates when
comparing. As a result, lenders frequently lower rates to remain competitive.
Why are Mortgage Rates Decreasing in Toronto?
In 2020, the Bank of Canada slashed the prime rate from 3.95% to 2.45% to combat Covid
economic damage. This 150 point drop decreased banks’ borrowing cost, allowing them to
reduce mortgage interest rates. The change significantly impacted mortgage lenders in Toronto,
who used it as an opportunity to undercut each other.
To ensure you are receiving the best mortgage rates in Toronto, it’s a great idea to talk with
multiple lenders or brokers to have them compete for your business. The difference between
mortgage lenders and brokers is that brokers act as an agent to you and can interact with
multiple lenders, earning the best interest rates for you. A lender will provide you with a specific
mortgage at that location.
How Many Mortgage Brokers are Working in Toronto?
According to the Financial Services Commission of Ontario, there are over 340 mortgage brokers and 2700 licenced mortgage agents in Toronto. This translates to roughly 21% of all brokers and agents in Ontario.
Brokers and agents are attracted to Toronto due to the high demand for their services. When immigrants arrive in Canada, their lack of credit history and income complexity creates challenges to receiving a mortgage. Brokers and agents help immigrants overcome these obstacles and qualify for a mortgage. The ethnic diversity of the GTA attracts many immigrants and, therefore, business opportunities for mortgage brokers.
The difference between mortgage lenders and brokers is that brokers act as an agent to you and can interact with multiple lenders, earning the best interest rates for you. Although you pay a premium to the broker for doing this work, they may help you access cheaper mortgages than you could individually.
How Many Mortgage Lenders are Working in Toronto?
A direct lender determines if you qualify for a mortgage at that particular bank. This is different from a mortgage broker who approaches multiple lenders on your behalf.
Big Five Banks in Toronto
In Toronto, you can receive a mortgage from any of the Big Five banks. The Big Five banks in Toronto include:
RBC
TD Canada Trust
BMO
CIBC
Scotiabank
There is likely room for negotiation when working with a big bank. This is because they provide mortgage representatives with the ability to offer a better deal.
Small Banks in Toronto
Toronto has many smaller banks that you might not have heard of before, such as Street Capital Bank of Canada, Equitable Bank, and National Bank, which is available nationally. With so many banks to choose from, you shouldn't have any problem locating the best deal.
Credit Unions in Toronto
Credit unions are different from banks because they're not-for-profit organizations that operate like community groups. They only offer loans to their members, who are typically associated with the same organization or profession.
How Do Mortgage Rates Affect Real Estate Prices?
Mortgage rates have a negative influence on real estate prices. That means when mortgage rates decrease, there is a positive influence on real estate prices. Higher mortgage rates could harm real estate prices because high borrowing costs will deter buyers.
The number one goal of homeowners is to pay off their mortgage. Lower rates motivate more people to borrow money and become first-time homebuyers. When first-time homebuyers are buying homes, the market is thriving. This doesn't always mean that home prices will increase, but it does result in more demand which helps drive up prices.
What Factors Affect Mortgage Rates?
Many factors affect mortgage rates, including inflation, unemployment rates, central banks activities, and oil price fluctuations. However, these factors don't change overnight; they take months or even years to impact rates. When interest rates do change, they only move up or down by a few percentage points.
It is difficult to predict what will happen to mortgage rates in the future. The safest bet would be to assume that mortgage rates will increase over time due to Bank of Canada policies. However, even the end of interest rates is uncertain due to global economic factors out of Canada's control.
FAQ
Where do I find financial help with purchasing a home?
There are many different ways you can find financial assistance with purchasing a home. One way is by asking friends and family members if they would be willing to help. You could also ask the people you are renting from if they have any advice or resources that may assist you. Another option is looking into the Canadian Mortgage and Housing Corporation, which has many programs for first-time buyers who can't afford a mortgage on their own.
How do I know if a broker is reputable?
Just because a broker is licensed doesn't necessarily mean that they have your best interests in mind. One way is by looking at the broker's license and checking it against the license board's website. The second way is by looking into reviews on Google or Yelp and reading reviews on people's blogs. Finally, you could also research what other brokers say about them.
What are the benefits of using a mortgage broker vs. a bank?
One advantage of using a mortgage broker is that you get to choose from various interest rates, whereas if you go through a bank, they'll dictate what you can get. Additionally, applying for the loan with the help of a broker will save you time and headaches because they will handle the paperwork.
