It’s the best time of year to negotiate your mortgage rate. Here’s how

Click to play video: 'As fixed-rate mortgage rates decline, experts caution against longer-term mortgages'
As fixed-rate mortgage rates decline, experts caution against longer-term mortgages
WATCH: Canadians aiming to purchase a home this year have a lot of decisions to juggle, and those looking to secure or renew mortgage agreements have seen rates on some longer-term products drop. – Jan 12, 2024

Some mortgage rates are getting cheaper heading into the busy spring housing market, but experts say you’ll likely need to negotiate your way into the best rate possible.

Expectations that the Bank of Canada will cut interest rates sometime this year have already driven down rates on some fixed mortgage products. These rates are tied to the bond market, which can fluctuate based on expectations for where the central bank’s policy rate will head next.

That’s brought rates below five per cent on some three- and five-year fixed rate mortgages, according to comparator site

James Laird, co-CEO of, says that lenders are offering “sharp rates” right now as banks rely on the mortgage business to bolster their books and that spring is traditionally a busy time in the market.

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Lenders might also dangle cash-back incentives and other rewards to sweeten the pot for homeowners and prospective buyers who are shopping around for rates with a broker, he says.

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“This is the time of the year when lenders of all stripes put their best foot forward,” Laird says.

“They do fight aggressively with each other to hit their goals for the year. So consumers should definitely shop around and get a few different lenders competing, and they’ll probably get some pretty strong offers right now.”

Shop around! (Shop around!)

Canadians are unlikely to get the lowest advertised rates that they might be seeing online from their lenders upfront, says Vancouver-based mortgage expert Eitan Pinsky.

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He says there’s sometimes a “bait and switch” between the lowest advertised rate posted on a lender’s website and the reality of what a consumer will be offered. Many of those rates are reserved for insured mortgages, for instance, which generally means a property bought with a down payment of less than 20 per cent of the purchase price.

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While lenders might work a bit harder to offer a first-time buyer an attractive deal at the time of purchase, those renewing their mortgage will often get a weaker offer to start, Pinsky says. Instead, expect something between the lender’s posted rates online and the actual lowest rate they’re willing to give you.

“Lenders never give you their best rates upfront. It’s just that’s how it is,” he says.

Existing homeowners also might not know that they can work with a broker or other mortgage professional to shop around at the time of renewal, Pinsky says, and may default to whatever rate they can get with their current lender.

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But Pinsky says he’s never seen a bigger spread between one lender’s rates in the market and another’s than right now, with some banks offering three-year fixed mortgages at 5.7 per cent while others offer equivalent products at 5.1 per cent. That makes shopping around all the more important, he argues.

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“In many cases, you need to talk to a mortgage professional to see whether or not the rate that your lender is offering you is competitive.”

Once you have a comparable rate for the term you’re looking for from another source, Pinsky says you can bring that to the representative at your existing lender to give them a chance to match it, beat it, or lose your business.

Secure a rate early

In addition to shopping around, experts advise being ready with a rate offer months in advance of a renewal or a planned purchase.

A mortgage professional can secure a rate for you 120 days or four months in advance of when it’s needed.

Laird says that buffer can be important in case interest rates rise while you’re house hunting, as happened last spring when expectations shifted and the Bank of Canada returned to its rate hiking cycle in June.

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But for those renewing, he says there’s no rush to actually start the mortgage at the new rate on offer. Securing a rate with a professional means a homeowner is guaranteed they won’t pay anything higher than that at renewal, but if the bond market continues to ease and fixed rates drop even further, a homeowner can secure something even cheaper than their held rate at their renewal date.

“Hold a rate as soon as possible, but that doesn’t necessarily mean to start the mortgage,” he says.

“It’s sitting there as your option as to whether you will use it or not. And if rates drop between when you get the rate hold and when you actually need the mortgage, you will get the lower rate.”

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Typically, a lender will send you a possible renewal rate on your mortgage in advance of your term expiring, but Pinsky says you need not wait for the bank’s offer to start shopping around. When a bank does send its offer, a homeowner can come prepared with a better rate in hand to speed up the negotiations, he says.

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If the existing lender won’t meet a broker’s best rate and a homeowner decides to switch providers at renewal, borrowers should have statements like pay stubs and property records ready to go to speed up the process.

Laird says that the spring housing market is shaping up to be a busy one, with some would-be buyers coming off the sidelines amid a long-awaited easing in mortgage rates.

As a result, some properties may face bidding wars amid increased demand, he warns. Prospective buyers should have a rate secured and in hand before they start shopping so that if they have to move quickly on the right property, they’re able to do so without stress.

“Be well prepared so that when you find that perfect home, you know exactly how you’re going to finance it,” he says.

For more tips on how to break into Canada’s housing market, read Global News’s Home School series, which teaches Canadians everything they need to know about buying a home that wasn’t taught in the classroom.

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