Could Open Banking Get You a Better Mortgage

Could Open Banking Get You a Better Mortgage Deal?

Have you ever wondered if there's a better way to secure a great mortgage rate? Open banking might be the game-changer you've been waiting for.

What Is Open Banking?

Open banking allows you to safely and easily share your financial data with different banks and financial institutions. With just a few clicks, you can grant access to your information, helping you find the best interest rates and move your money quickly to where it benefits you most.

Why Does It Matter?

In Canada, the Big Five banks hold about 90% of all bank deposits, giving them significant control over mortgage funding. But open banking threatens this dominance by making it easier for you to find and switch to competitors offering better deals. This increased competition could lead to better interest rates and services for you.

The Shift to Online Banking

More people are choosing online banking, leading to traditional banks closing branches—215 in the past five years, to be exact. Digital banks like Wealthsimple and EQ Bank are attracting customers with high-interest accounts, offering rates as high as 3.75% on everyday banking. Wealthsimple has nearly doubled its assets to $50 billion since last year!

Impact on Mortgages

If you move your daily banking to these competitors, you're less likely to get your mortgage from a traditional bank. This shift could force big banks to offer more competitive mortgage rates to keep your business. They might also have to find new ways to fund mortgages, potentially narrowing the gap between them and online lenders.

Faster, Easier Mortgage Approvals

Open banking could streamline the mortgage approval process. Imagine opening an app, answering a few questions, and finding out if you qualify for a mortgage—all in about a minute. It makes the whole experience faster and more convenient for you.

Enhanced Security

By connecting lenders directly to your accurate financial data, open banking can reduce fraud. This means a safer borrowing experience for you.

What's the Hold-Up?

Despite the promise of open banking, progress in Canada has been slow. While it hasn't arrived yet, it's on the horizon. When it does, expect the big banks to step up their game to earn your business.

The Bottom Line

Open banking is set to boost competition and efficiency in the mortgage market. It's all about giving you more control and better options. So, keep an eye out—your next mortgage deal could be just a few clicks away!