Keeping it Real- Just the Facts

Date: June 15, 2023

Category: Blogs,Mortgage Tips & Advice

There’s so much chatter out there about what’s happening, and it can be hard to separate noise from facts.

Let’s look at the facts.

The prime rate is at a 22-year high, currently sitting at 6.95%
For every $100,000 of the mortgage, your payment will increase by about $15.50
Bank of Canada has indicated that it’s prepared to increase rates again next month if inflation numbers continue to rise.
The last BOC announcement and the forecasted increase are affecting bond yields which are driving fixed rates up quickly
If you are sitting on the fence – get off it, especially if you have an upcoming renewal.
Remember rate is temporary. Equity is long term
Reports from BOC state that one-third of households will see a payment increase of up to 40% at renewal.
I did the math on a $400,000 mortgage. (currently at 1.89%, 30-year amortization, with a monthly payment of $1,457). When they come up for renewal, if rates are still in the 5% range, their monthly payment will increase by 28% to $2035. This assumes they have not used any pre-payment options during their term.
I have been saying it every month in my newsletter, and I will continue to say it: please use your pre-payment privileges, especially if your rate is under 4%
New mortgage originations are down 42% in the first quarter.
Ask any Realtor or Mortgage Broker, and they will agree this has been the slowest year since 2018
Approx 750,000 mortgages are coming due in the next 12 months.
1.3 million borrowers have already missed mortgage payments – according to Equifax
In the grand scheme, that’s less than 1%; however, if you are among those struggling, reach out and let us work out a solution for you.
Once you’ve missed a mortgage payment, things get tough with lenders. So make sure you connect before that.
Historically variable rates are lower than fixed; however, we are currently in an inverted rate market.
You need to keep in mind; your rate is temporary; equity builds wealth over time.
If you received a mortgage before 2023, remember that you are qualified to carry a mortgage of 5.25%, and we are not far from that rate right now.