If you are looking at buying a home or refinancing your existing home, you have probably been having a lot of discussions about interest rates (taux hypothecaires). If you enjoy talking about interest rates, fine, go ahead. It's like talking about the weather: it won't make any difference, but it gives you something to talk about.
The simple truth is that the variance in interest rates from one lending institution to another is so small that it will not make a big difference in the total cost of your home loan.
(As a matter of fact, the difference is only about .06%, which is a saving of $41.12 per year on a $100,000 mortgage.
Is it worth all of the time spent on calling various mortgage brokers (courtier hypothecaire) and researching on the internet to achieve such a tiny savings? No. If you calculated the time spent shopping around for a rate at your per hour wage, you would find you spent a lot more than the $41.12 average savings! The fact is that any real savings on your mortgage is not going to be made by shopping around for hours and hours looking for the lowest rate. Let's face it, all of the lenders will know your credit rating; they are all going to be looking at the same factors and therefore the rates each of them quotes will be in the same narrow range. Determining interest rates is just a function of the risk/reward ratios that lenders analyze. Since they all use the same analysis techniques, you cannot expect the rates to be grossly different. (Don't listen to your neighbors. Anyone who boasts that he got a dramatically different interest rate than you were able to obtain either has a much more favorable credit rating, or is lying.)
There is a more important factor to look at. Instead of solely relying on obtaining the lowest interest rate, a mortgage borrower should be concentrating on following the correct "mortgage strategy". There are various mortgage strategies that are out there, from fixed to adjustable rate loans (taux hypothecaires), balloon loans or prime rate based loans. Working with a mortgage lender who is knowledgeable about economics, looking at yield curves and who studies your individual circumstances to devise the perfect mortgage strategy for you is going to save you a great deal more money over the life of your mortgage loan. It can probably save you tens of thousands of dollars in total mortgage costs, rather than less than $100 per year.
Why do banks only talk about interest rates when there really isn't that much of a difference between rates? Because that is the easy way to attract borrowers. Developing an entire mortgage strategy for a customer takes a lot more in terms of understanding and analyzing markets, mortgage products, individual needs and a host of variables. Many bankers and mortgage brokers have neither the time nor the expertise to perform this in depth services for their customers.
