The end of your mortgage term brings opportunities you might not be aware of.  Yes, signing to renew your mortgage with your existing lender is easy, typically requiring just a signature.   And applying to switch your mortgage does entail 1) completing a new mortgage application and 2) providing all the required documents to verify your financial position.  But considering the potential benefits, it’s worth taking a look at what might be available to you and starting the conversation in advance.

Get a Better Rate

Are you aware that when you receive notice that your mortgage is coming up for renewal, this is the best time to shop around for a more favourable interest rate? At renewal time, it is easy to shop around or switch lenders for a preferable interest rate as it doesn’t break your mortgage. Interest rates are expected to come down as we move into the New Year.  Taking some time to reach out to me and shopping the market could help save you money, and help you make the most of the equity you may have in your property.

Consolidate Debt

Renewal time is also a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. For some, this means consolidating your holiday credit card debt into your mortgage, for others it could be car loans, education, etc. Regardless of the type of debt, consolidating into your mortgage allows for one easy payment instead of juggling multiple loans. Plus, in most cases, the interest rate on your mortgage is less than you would be charged with credit card companies.

Start on that Renovation or Buy Another Property

Do you have projects around the house you’ve been thinking of completing? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations for that dream kitchen, updated bathroom, or you could even utilize it to purchase another property.

Change Your Rate Type, Add a Home Equity Line of Credit, Reduce Your Payments

Looking to change your existing mortgage ? Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in.  Alternatively, maybe you’d like to switch to a variable rate as interest rates start to level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster, or alternatively, to reduce your payments.

Change Your Lender

Perhaps a different bank has a lower rate or a mortgage product with better terms for you. A mortgage renewal is a great time to switch to a different bank or credit union if your needs have changed.

Regardless of how you feel about your current mortgage and what changes you may want to make, if your mortgage is coming up for renewal within the next year, or if you simply have questions, please don’t hesitate to reach out.  I’d be happy to discuss your situation and review any changes that would be beneficial for you to reach your goals; from shopping for new rates or accessing the equity in your home to cover expenses or investments.  Together we can review your options now and set you on your path for future financial success.

Adapted from DLC Marketing

Image Credit: Nine Kopfer, Unsplash

It was widely expected that the Bank of Canada would maintain its key policy rate at 5% for the third consecutive time. It will continue to sell government securities (quantitative tightening) to normalize its balance sheet. Market participants weighed and measured each word of the BoC press release and assessed that the Bank took a less hawkish stance.

This time, the release said, “Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.”

At the prior meeting in late October, the Bank said that the labour market remained “on the tight side” but acknowledged today that it was loosening. Indeed, the October Monetary Policy Report suggested that the inflation rate would not hit its 2% target level until late 2025.

Today, the tone was much more optimistic, suggesting that policymakers are increasingly confident interest rates are restrictive enough to bring inflation back to the 2% target. Still, Bank officials want to see more progress on core inflation before it begins to ease. It said, “The Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.”

The central bank focuses on “the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour” and remains resolute in restoring price stability.

Bottom Line

Bond yields peaked in early October and have fallen by nearly 100 basis points. This has led to reductions in fixed mortgage rates; however, those cuts have been far less than historical experience would have suggested, given the rally in 5-year government bonds.

Cuts in variable mortgage rates await a reduction in the overnight policy rate, which triggers a commensurate decline in the prime rate, which is currently stuck at 7.2%. I expect the BoC to begin cutting the policy rate by the middle of next year, taking it down a full percentage point to 4% by year-end.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

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