Choosing the right mortgage can be overwhelming. Although going to your bank might be the logical move, you don’t know if this will net you the best mortgage plan for your budget, lifestyle and prospects. And searching by yourself can give you the feeling that there is just too much to know.That’s why mortgage brokers seem to have become an increasingly popular channel for consumers to find the right mortgage for them. According to the Canadian Association of Accredited Mortgage Professionals Fall 2009 Canadian Mortgage Industry Snapshot, 23% oall mortgages in 2009 were handled by a mortgage broker, including 32% oall new mortgages.
Albertans lead the trend, with 34% oall mortgages in that province being handled by brokers. Most Ontarians and those living in the Atlantic Provinces prefer going through one of the Big Five Banks. And Credit Unions/Caisses Popularies are strongest in French Canada and the Prairies.
It appears that young people are the ones driving the success of mortgage brokers. In 2009, 28% omortgages amongst 18-34 year-olds were through a broker, while only 17% oCanadians older than 55 used one. This is likely because young people are more uncertain about how to choose the right mortgage and because brokers are still relatively new to Canadians.
The most important finding from the research is that Canadians use brokers for new mortgages, but they tend to neglect them for their renegotiations. This could be a mistake. The data in this report shows that brokers can be an effective way to get lower interest rates. Those Canadians who renegotiated their mortgage through a broker reduced their interest rate by 125 points compared to the 114 point reductions consumers got when they went through a Bank or Credit Union.
Rob Daniel, the Managing Director of Maritz Research Canada (the group that conducted the research), had this to say: “The Broker channel has done a good job marketing the effectiveness of its service for originations, but Canadians are defaulting to their lender or Banks when it comes time to renegotiate. Brokers need to let their customers know that their services are very useful – and financially beneficial – during the renegotiation process as well.”
Of course, using a broker may not always be in your best interest, particularly if you have a good relationship with your bank, and are confident you are getting the best rates. But if you have any doubts, getting a mortgage broker might be one of the best ways to save you money in the long term.
Contact Signature Service Financial today for more information.
Image: Stefano Valle / FreeDigitalPhotos.net
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