Posted Rate vs Discounted Rate at Mortgage Renewal in Alberta?
Short answer
Renewal letters often quote posted or near-posted rates that are higher than discounted rates available through negotiation or competing lenders. The gap can be 0.20–0.80% or more depending on lender and market — always compare your letter to current discount rates, not the posted rate on the bank’s website alone.
The plain-English version
Posted rates are the lender’s sticker price. Discounted (contract) rates are what borrowers actually pay after negotiation or broker pricing. Renewal mailers sometimes use posted rates because many customers sign without shopping. Discounts at renewal are not automatic — you may need to ask or show competing offers.
IRD penalties on fixed mortgages are often calculated using posted rates, which is why posted rates matter even if you never pay them. At renewal, focus on the contract rate you will actually pay, not the posted rate used internally for penalties.
Alberta-specific considerations
- Brokers serving Alberta often access monoline discounts that differ from big-bank renewal mailers — compare both channels.
- Credit union renewal pricing may be transparent with less spread between posted and contract rates, but still verify.
- Automatic renewals frequently use posted or premium rates — treat them as a deadline to negotiate, not a final offer.
Example scenario
Renewal letter offers 5-year fixed at 5.79% posted. After negotiation or through a broker you are quoted 5.19% on the same term. On $330,000 over 20 years, that 0.60% gap is about $105/month, or roughly $6,300 over five years — a planning estimate before fees.
Common mistakes to avoid
- Signing a posted renewal rate without asking for a discount.
- Assuming your loyalty automatically earns the best rate.
- Comparing your renewal posted rate to another lender’s discounted quote without matching terms.
- Not knowing posted rates affect IRD if you break the mortgage later.