Mortgage Renewals in 2024

General Trish Pigott 12 Jun

Canadians are leaving money on the table by not negotiating their mortgage renewal rates.  Why?  Most likely because they do not have a professional representing them.

In the face of higher costs more Canadians are changing their grocery shopping habits, hunting for bargains, and switching to lower-cost brands — yet many are leaving money on the table when it comes to their single largest transaction, their mortgage.

According to a recent survey conducted by Mortgage Professionals Canada, homeowners are doing less haggling at renewal, despite most facing higher interest rates.  The study found that 41% of borrowers accepted the initial rate offered by their lender, up from 37% two years ago. Furthermore, just 8% say they “significantly” negotiated their rate at renewal, down by half since 2021, when 16% haggled aggressively.

Part of our job as your Mortgage Broker is to negotiate those rates on your behalf and there is no cost to you as the home owner.  Generally we will review what your bank is offering you, negotiate with them to ensure you are receiving the best rates in the market and if your lender does not come to the table, then we will arrange a new mortgage for you with a lender that wants your business.

I find it truly unethical that a bank rewards it’s customers for their past years of business by not offering them the best rates available and better yet, rates they are offering new customers.  It’s like they are punishing home owners for being loyal clients.  More often than not, banks are offering higher rates in hopes that you sign on the dotted line without negotiating and everyone just moves on.  Then if you do ask for a better rate, they get you to go find out what the competitors are doing and then “maybe, just maybe” they will match the rate.

Leave the haggling to us, let us shop the market and let us do the leg work to ensure you finding the best rate possible for your next mortgage term.  A bit more on mortgage renewals;

When renewing your mortgage, you have a few different options to consider;

  1. Renewing your current balance and amortization (total time left on your mortgage) with your current lender into what ever rate they are offering you, and not making any changes at all.  This does not require re-qualification in most cases.
  2. Renew with a *new* lender, keeping your current balance and remaining amortization the same, but shopping the mortgage with all lenders for best rates in the market.  This is the same process of a new mortgage and requires re-qualifying.
  3. Refinance (means changing the mortgage amount and/or amortization) at best rates in the market which involves seeing a lawyer or notary. Most commonly done when accessing equity to renovate, consolidate debts or make another large purchase. This process requires re-qualifying.

Renewal Timeline:

  • 6 months before – we update your file with your current employment and financial situation so that once we are within the 4 month timeline to hold rates, we have all accurate information on file to make the process easier
  • 6 months before – we start discussing if there are any potential changes you want to make to your current mortgage as well as your current cash flow
  • 4 months before – we can hold a new rate for you with the best lender and rates in the market. This is important as the rate market is so volatile that there can be drastic differences (nearly 2%) by securing a rate early vs leaving it to the last minute.  Even though we have a rate held for you, we will continue to then monitor all other banks and if rates come down lower than what we have held with any other lender, we will secure that rate as well so you are protected
  • 2 months before your maturity date, we will ask you to obtain or we will request on your behalf, what your current lender is going to offer you so we can compare it to what we have held for you
  • 30 days before your maturity date you should have made your decision with what route to go as it does take time to either switch your current mortgage to the new lender or refinance your mortgage.  Leaving it to the last minute leaves you at risk of missing on out on previous rate holds or having to accept whatever your current lender offers you
  • Reminder: we have room for negotiation with either a new lender or your current in getting the most competitive rate for you
  • If we did NOT arrange your current mortgage and would like our help with your upcoming renewal, please reach out to our office
6 Key benefits of have us handle your mortgage renewal for you:
  1. Full product and lender review across all banks
  2. Expert advice and individual mortgage strategy developed based on your personal situation
  3. Rate negotiation on your behalf
  4. Zero cost for our services
  5. Full VIP service at our office rather than be treated like a number
  6. Accessibility, we are available by phone, text or email 7 days a week

CLICK HERE  to book a call to discuss your upcoming mortgage renewal.  Remember to do this at least 4 months in advance of your mortgage maturity.

If you want to receive regular updates about the mortgage market, join hundred of homeowners who trust our newsletter to keep them informed by CLICKING HERE.

New 30 Year Amortization for First Time Buyers

General Trish Pigott 11 Jun

Calling all First Time Home Buyers! Did you know that as of August 1, 2024, you will be eligible for a 30 year Amortization when you have less than 20% down? Today the maximum time frame is 25 year amortization so this is a big help for affordability.
 
The example below is based on a new purchase price including GST of $816,900, with the minimum down payment and a rate based on 5.34% for a 3 year fixed rate.

To get a 30-year insured amortization:

  1. At least one of the borrowers on the application must be a first-time home buyer, meaning they meet one of the following criteria:
    • The borrower has never purchased a home before;
    • In the last 4 years, the borrower has not had a principal residence that either they or their current spouse or common-law partner owned; or,
    • The borrower recently experienced the breakdown of a marriage or common-law partnership.
  2. The new home must not have been previously occupied for residential purposes. (Note: This does not exclude new condos that have had an interim occupancy period.)
  3. The mortgage must be high-ratio insured (20% down payment or less)
  4. This measure applies only to mortgage applications on or after August 1, 2024
  5. The difference in the insurance premium is minimal and can be added to the mortgage.  There is a .20% premium added to the current insurance premium
  6. A 30 year Amortization results in roughly $200-$300 per month in a lower payment depending on mortgage amount

Like any new government initiated program, details will unfold as we get closer to the roll out date and we will continue to report on it

If you would like more information or to see how you specifically can benefit from this, please reach out to our office.

June 2024 Rate Announcement

General Trish Pigott 5 Jun

From our partners at First National Financial, here is some insight on the Bank of Canada announcement and rate drop.

Today, the Bank of Canada reduced its overnight policy interest rate by 0.25% to 4.75%. This welcome and widely expected decision comes on the heels of evidence pointing to a deceleration of the rate of inflation.

We examine the Bank’s rationale for this move by summarizing its observations below, including its all-important outlook comments that are sure to shape market expectations for the remainder of the year.

Canadian inflation

  • Inflation measured by the Consumer Price Index (CPI) eased further in April to 2.7%
  • The Bank’s preferred measures of core inflation also slowed and three-month indicators suggest continued downward momentum
  • Indicators of the breadth of price increases across components of the CPI have moved down further and are near their historical average,
  • however, shelter price inflation remains high

Canadian economic performance and housing

  • Economic growth resumed in the first quarter of 2024 after stalling in the second half of last year
  • At 1.7%, first-quarter GDP growth was slower than the Bank previously forecast with weaker inventory investment dampening activity
  • Consumption growth was solid at about 3%, and business investment and housing activity also increased
  • Labour market data show Canadian businesses continue to hire, although employment has been growing at a slower pace than the working-age population
  • Wage pressures remain but look to be moderating gradually
  • Overall, recent data suggest the economy is still operating in excess supply

Global economic performance and bond yields

  • The global economy grew by about 3% in the first quarter of 2024, broadly in line with the Bank’s April Monetary Policy Report projection
  • The U.S. economy expanded more slowly than was expected, as weakness in exports and inventories weighed on activity
  • In the euro area, activity picked up in the first quarter of 2024 while China’s economy was also stronger in the first quarter, buoyed by exports and industrial production, although domestic demand remained weak
  • Inflation in most advanced economies continues to ease, although progress towards price stability is “bumpy” and is proceeding at different speeds across regions
  • Oil prices have averaged close to the Bank’s assumptions, and financial conditions are little changed since April

Summary comments and outlook

The Bank cited continued evidence that underlying inflation is easing for its decision to change its policy interest rate. More specifically, it said that “monetary policy no longer needs to be as restrictive.”

Also welcome was the Bank’s statement that “recent data” have “increased our confidence that inflation will continue to move towards” its 2% target.

However, it also added this to its outlook: “Nonetheless, risks to the inflation outlook remain. Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour.”

And has it has been doing for some time, it said the Bank “remains resolute in its commitment to restoring price stability for Canadians.”

Next up

The Bank returns on July 24th with its next monetary policy announcement.

What Will the Bank of Canada do on June 5, 2024?

General Trish Pigott 4 Jun

Home owners and real estate and mortgage professionals have all been waiting patiently for the past two years for some relief in interest rates and June 5, 2024 may be our lucky day!

Last Fridays reporting on GDP (gross domestic product) came in at a disappointing number for the Bank of Canada (BoC) at 1.7% with an expectation of 2.2%  This signals a weakened economy in simple terms. This along with all other data collected over the past few months such as inflation and employment, is what we have been waiting for to have enough of an impact to trigger our first rate drop.

Keep in mind, this weeks rate announcement if it does drop, will only affect the Variable Rate mortgage holders or anyone with a loan attached to Canada’s prime rate of 7.20%.  We may see that come down to 6.95%  if we are all lucky.  After Friday’s announcement on GDP, 75% of economists are predicting a rate cut, up from 66% last Thursday.

The Fixed rates are affected by the Bond market which did see a drop in as well with Friday’s news so we could potentially see fixed rates being affected tomorrow as well but we will report more on that on June 5th.

So many home buyers are waiting on this announcement before making any sort of move but what some are forgetting is that the minute we see a slight reduction in rates, the market will pick up steam and offers become more competitive and often end up over asking.  So if you are waiting to see, be reminded that there is no time like the present as today you could be the only offer yet as soon as rates drop, there will most likely be many more home shoppers out there costing you a lot more in purchase price than the slight difference in rate.

Here’s a few quick reminders;

  • If rates drop by .25% next week, it means about $16 per month for $100,000 in mortgage
  • Most home buyers and home owners are choosing the 3 year fixed rate right now as it’s over 1% less than the current Variable Rate so they will not be impacted by the next announcement
  • Getting  Pre-Approved and Pre-Qualified is your best attempt at a smooth offer without any delays or extensions needed. Always be prepared and get the process started in advance of looking at properties

Stay tuned for tomorrows full details once the BoC announces it’s next move.