The Trap of Waiting to Lock In When Mortgage Rates are Dropping

When rates start drifting down, many hold off on locking in a rate as they’re expecting lower rates to come. I get it. If you’re buying soon or your mortgage renewal is approaching, the idea of squeezing out a bit more savings is pretty appealing. But in the real world, waiting often turns a great deal into a “wish we’d moved sooner” moment. Here’s what we see day-to-day, and how to protect yourself without overthinking it.

When the Lowest-Rate Lender Gets Swamped

Any time a lender is leading the industry with the lowest mortgage rate, their underwriting department becomes overwhelmed with new applications. Response times can stretch from days to weeks. I’ve watched approvals that used to land in 48 hours slip past a month when volume spikes. Service starts to slide as they struggle to keep up with the continual flow of new applications.  It can get to the point where the lender has no choice but to increase their rates to shut off the flow of applications to allow them to get caught up.

This isn’t rare. It happens with monolines, credit unions, and yes… major banks. The market-leading rate disappears, the lender catches up, and there’s no promise that their rock-bottom deal will return. If you were holding off hoping to find a lower rate, you may find yourself locking something higher. 

If a lender clearly has the lowest rate, it’s best to grab it while it’s live. This doesn’t mean that you’re obligated to take it, should a lower rate become available (more on this later). 

Rate Promotions End… Sometimes Quietly

Mortgage rate promos are like pop-up shops: here, then gone. These promos may be widely available, or they may be exclusive to PMT Mortgage and a few other select brokerages due to our higher volumes.  They may come with a set end date, or they just… vanish. No ominous music, no countdown clock… just pulled. 

There is one hot promo on right now: 

• 5-year fixed at 3.84% for select insured purchases as well as purchases under $1M with 35% or greater down payment. It requires submission by September 30 and closing after November 1. This is an example of a promo with a set end date. 

Here’s an example of a promo that recently ended with little notice: 

• 3-year fixed at 3.69% (insured purchases & some insured transfers) for closings within 30 days. Even though this promo officially ended, we’ve still been getting this rate for our clients on some insured purchases. However, we haven’t received the same exceptions on insured transfers which are now at 3.94% for the same product. This is a perfect example of a promo ending while there is downward pressure on fixed rates. 

Despite us telling our clients that a promo is ending, some still choose to wait… and end up having to accept a higher rate. It’s not about scare tactics; it’s about how lenders manage inventory and risk in real time.

Variable Rate Discounts Shrinking

Some looking for a variable rate will wait for the next Bank of Canada rate announcement as they don’t want to lock in if a cut is expected. But why? With a variable rate mortgage, your rate is going to fall with prime rate either way. 

The problem with waiting in this case is that lenders will sometimes reduce their variable rate discounts when the Bank of Canada cuts their rate. We’ve already seen this happen multiple times this year. At the start of the year, there were variable rate mortgages as low as prime -1.10% for some situations… on both insured and some uninsured mortgages. While it still may be possible to get down to as low as prime 1.00% on some insured files, most uninsured variable rate discounts have decreased and are now in the range of prime -0.80% to prime -0.65%, depending on the situation (currently 3.90% to 4.05%). 

If you already know you want a variable rate mortgage, lock the discount while it’s favourable. 

You’ll still benefit if prime drops. 

Trends Flip

While there is currently downward pressure on mortgage rates, the trend can always change… and it will. It’s just a matter of when. It could happen next year, next month or even next week. There are no guarantees. It only takes one hotter-than-expected inflation report, a U.S. policy headline, a Trump tariff threat, a bond market wobble, or a shift in risk appetite to push fixed rates higher… temporarily or longer. I can’t even tell you how many times we’ve quoted a rate to a client that is clearly the lowest on the market… but they still think they’ll find lower.  Rates increase, and that’s when we hear back from them saying they’re ready to move forward with the previously quoted rate. But it’s too late as the rate had increased. They knew it was a great deal… but still thought they could do better, and now they have to accept a higher rate as a result. 

There is no guarantee that rates will continue to fall and no guarantee that they won’t start to increase unexpectedly. Anything can happen in the mortgage world. 

The Risk of Locking In a Rate Early 

Some are hesitant to lock in a rate as they want to shop around to ensure they’re getting the lowest rate on the market. It’s only natural that they want to get the best deal, but we see people shop themselves out of a good rate time and time again. They keep putting it off… and it gets to the point where the rate they wanted is no longer available. 

While you’re of course welcome to shop around, one of the big benefits of working with PMT Mortgage is that we do the rate shopping for you. We’re very serious about getting you the lowest rate on the market… and we’re constantly sourcing out lenders with lower mortgage rates, and presenting these options to our clients. We work with major banks such as TD, Scotiabank, BMO and National Bank. Major credit unions such as DUCA and Alterna Savings. Life insurance companies such as Manulife and Desjardins. Monoline lenders such as MCAP, First National, MCAN Home… and many others. 

When we submit your application to a lender for approval, this locks the rate for you. But it does not mean that you’re 100% obligated to go with that rate… or that lender for that matter.  We will be monitoring rates for you right up until closing.  If the rate drops, then we'll ensure that you get the lower rate, which can be done right up until the week before closing. There is the lowest rate now and then there is the lowest rate at closing. It's the one at closing that is most important. 

If another lender were to come out with a lower rate, we can even move you to that lender. Even if you have already signed the documents. Signing does not legally bind you to that rate or that lender. 

That said, it’s not always about the rate and the lowest rate doesn’t always result in the most savings. You can read more about this in my blog on The Best Mortgage Rate Vs. The Best Mortgage. 

Final Thoughts

Falling rates are exciting… and they can be distracting. The only way to guarantee you won’t miss the bottom is to lock early and let us keep sharpening it for you wherever possible. The only risk is if you choose to wait. 

If you’ve got a purchase or renewal within 120 days, reach out to us! Tell us your timeline and a few details, and we’ll come back with the best options for your specific situation… including any active promos you can still take advantage of. At PMT Mortgage, we’re committed to getting you the lowest rate available… while giving you better experience than you’ll find anywhere else. And that’s something we take seriously.