Waiting for interest rates to drop further? That strategy can backfire

Persistent mortgage myths continue to shape buyer decisions and “may quietly undermine the ability to act with confidence when the time comes to purchase a home,” says Leah Zlatkin, a licenced mortgage broker and LowestRates.ca expert.

Zlatkin recently released what she describes as the five most common misconceptions based on conversations she has had with people starting out in the buying process journey.

“I receive a lot of phone calls from clients and there are a lot of common misconceptions,” she says. “I get asked the same questions over and over and if I am getting asked the same questions over and over, it must mean there is a predominant problem in the marketplace.”

The big villain, she adds, is social media: “A client will say, ‘hey, I saw this reel on Instagram that said blah, blah, is that true?’ No, it’s not true, but completely false.”

The five myths are (indicated in bold) followed by commentary provided by Zlatkin, a broker with mortgagebroker.ca as well as its chief operating officer.

Myth Number One: A 20 per cent down payment is mandatory to purchase a home . It’s possible to buy a home with as little as five per cent down that’s five per cent on the portion up to $499,999.99, and 10 per cent on the amount between $500,000 and $1,499,999 for insured mortgages making homeownership more accessible, sooner, for some buyers. However, this accessibility comes at a higher cost.

Opting for a smaller down payment means a larger loan, which translates to higher monthly mortgage payments and the mandatory expense of mortgage default insurance (adding thousands to your borrowing cost).

Myth Number Two: Variable rates are inherently too risky . This common fear, heightened by recent years of volatility, overlooks crucial context. While variable rates demand budget flexibility for potential payment changes, historical data shows they’ve often saved Canadians money in the long-term.

Crucially, the landscape in 2025 is different: the Bank of Canada began cutting rates in mid-2024 and is now weighing whether further cuts are needed, with economists split following recent inflation declines and rising job losses. This means someone opting for a variable mortgage could see interest costs fall further, though the risk of unexpected rate hikes remains.

Myth Number Three: Pre-approval guarantees mortgage approval . This is one of the most common and misleading assumptions. A pre-approval is an initial estimate of your borrowing capacity based on preliminary financial information. It’s not a firm commitment from the lender. Final mortgage approval only happens once your income, credit and down payment are fully verified, and the property you’re purchasing is assessed to ensure it meets the lender’s appraisal and condition standards. Both your financial profile and the home itself must align with the lender’s criteria before any funds are released.

Myth Number Four: It’s better to wait until rates drop before buying. This timing strategy can easily backfire. Mortgage rates have already dropped significantly from their recent peaks following a series of Bank of Canada cuts. Waiting for potentially smaller, future decreases ignores a key market dynamic: falling rates ignite competition.

Myth Number Five: Your bank will always offer the best mortgage terms. As a new borrower, it’s natural to turn first to the bank you already use. However, limiting yourself to just one bank’s offerings could mean missing out on significant savings and better terms for your crucial first mortgage. Your bank can only present its own limited set of products. In contrast, an independent mortgage broker works with a wide network of lenders; this includes major banks, credit unions, and specialized ‘broker-only’ lenders.

---

SOURCE AND FOR MORE INFORMATION: Five mortgage myths that simply are not true