Canadians who switch mortgages and first time home buyers get better deals from bank than existing customers, reports the Toronto Star.
A 2011 Bank of Canada study found that existing bank customers don’t get the best deal when they renew a mortgage. People who switch and first-time buyers do. That’s because new customers offer banks an opportunity to sell more products, so they’re eager to bring that new business in. Existing customers assume they’ll get the best deal because of their loyalty and so many don’t bother to shop around. Lacking ammunition, the discount they get is not as much.
Kelvin Mangaroo, president of Ratesupermarket.ca, an interest rate comparison web site, says Canadians have been slow adopters of web rate comparison sites. He worked in the U.K. between 2003 and 2008 and was impressed with moneysupermarket.com, an interest rate aggregator that grew so quickly, it went public in 2007. The initial share offering was worth more than $1.5 billion.
“There’s a cost when people don’t shop around,” says Mangaroo. “People call Bell and Rogers and ask for a better deal. They can do that with their financial services too.”
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