The Bank Of Canada wanted to know what helps consumers get the best mortgage interest rate so they did a study among the top 10 mortgage lenders, below are some of the results

Bargain

• Research proves that bank profits “are significantly higher in haggle environments.” As a result, banks prefer not to put all of their cards on the table.
• This leads to “price discrimination” whereby banks give better deals to skilled negotiators and well-informed borrowers, and stick it to people who don’t watch out for themselves.

Have larger mortgages

• “…since few negotiate the renewal of their mortgage…(this) provides lenders with an incentive to attract consumers with larger loans who have large outstanding balances at the time of renewal.”

Use a broker

• The report states that brokers lower the “search costs” of getting multiple quotes. Multiple quotes (lower search costs) are strongly correlated with lower rates.
• “Over the full sample the average impact of a mortgage broker is to reduce rates by 17.5 basis points.”  That’s ~$1,670 of interest savings on a typical $200,000 mortgage over five years.
• Bank “mortgage specialists offer convenience to consumers, although they do not reduce search costs. This is because they work for one lender only.”

Use smaller lenders

• “We conclude that the larger a bank’s market share, the higher are the rates that it can charge to borrowers.”
• “…Borrowers who are new clients at one of the Big 8 banks receive less of a discount than borrowers who are new clients elsewhere.”