Date: November 28, 2023

Category: Newsletter

You may have noticed that we are sending out DYK Updates. We know your time is valuable, and we thought bite-size information might be better than one long newsletter update that may go unread. 

Don’t get me wrong, our newsletters will still be jam-packed with solid information, but we want something for every reader’s style.  

Now, let’s talk about what’s happening on the mortgage front. 

Our last DYK Mortgage Minute Update discussed mortgage renewals and What to Expect in 2024+. Click here to read if you missed it.

Why is this so important, and why do I mention it again? 

We all remember the 2020 and 2021 mortgage rates being historically low. Those days are gone, and it’s unlikely we will see rates that low again. However, those low rates resulted in many Canadians breaking their mortgage at the time and renewing early to take advantage of low rates. As a result of these early renewals, we will see more than 60% of all mortgages renewing between 2024 and 2026. 

So here’s what you need to know.  

Some people will auto-renew due to fear of rising rates and not taking the time to do some homework.

Some people will have to auto-renew due to qualification guidelines – this is a mistake, there are options!

Some people will refinance on renewal to pay off debt accrued during the past few years. 

Some people will look at an aggressive strategy to pay off their mortgage faster.

Some people will be more open to the option of a reverse mortgage

Regardless of your situation, EVERYONE should be connecting with us to prepare a strategy for this next term in your mortgage cycle. It may work out that staying with your current lender is the best option, but you will only know once we look at all available options. 

Click here to connect with us and discuss your plans for 2024

WHY ARE FIXED RATES NOT DROPPING? 

Despite falling bond yields, lenders have been slow to pass on lower rates to consumers. Why is this? Based on conversations with numerous lenders, their explanation makes complete sense. Many lenders have shared that they have not yet passed the savings on to consumers as they are waiting for the Dec 6th Bank of Canada (BOC) announcement and its effects on the bond market. Lenders are not currently in a position where they can take on a flood of lower-rate mortgages should the BOC increase rates and thus affect bond rates. I understand we should see five-year fixed rates come down after Dec 6th if the BOC keeps the overnight rate as is.  

WHAT IS THE MORTGAGE CHARTER, AND HOW DOES IT AFFECT ME? 

The Mortgage Charter is a new term, but the content is nothing new. This is truly like repackaging a gift. This Christmas, the Finance Minister gifted us the Mortgage Charter. 

Some of the key details of The Mortgage Charter are; 

Advanced Notification of Mortgage Renewals

  • Basically, instead of getting your mortgage renewal 90 days before your renewal date, the lender will connect with you four to six months before your renewal date. FYI, they are already doing this, and so are we.

Mortgage Relief Measures

  • This isn’t new; most lenders are required to implement tailored relief policies for homeowners who face financial hardships and may extend amortization periods – really, what do you think 2023 was all about for many people?

Waiving Fees to Modified Mortgage Terms

  • Lenders are asked to waive fees and costs associated with relief measures; this may include modifying mortgage terms or adjusting payment schedules during financial hardships – again, this is what we’ve already been doing in 2023

Waiving Mortgage Prepayment Penalties

  • There is nothing new here; all lenders have prepayment options, and giving those homeowners in financial distress the ability to make lump sum payments without incurring prepayment penalties is a joke because if those people had funds, they would not be in financial hardship.

NO STRESS TEST AT RENEWAL

  • Arguably, this is a big one! This was apparently always the case; however, it was never focused on previously. Homeowners with an insured mortgage that is up for renewal can move to another lender without needing to stress-test their mortgage. 
  • This means that homeowners with insured mortgages can shop around for rates at renewal and qualify at the rate they are being offered, not a stress-tested rate.

FINAL THOUGHT….

We are in the middle of two wars! I’m not focusing on predictions but rather on preparation. 

It’s not looking like 2024 is going to be an easier year for anyone at this point, so I ask you the following question: What do you need to honour your financial commitments should rates stay the same? Are you prepared?

As your mortgage broker, we are keeping an eye on rates, watching for news and keeping you up to date. 

As our client, we ask that you connect with us and allow us to help you plan for 2024. 

Regardless of your mortgage renewal date, I invite you to click here to book a time to check-in.

Let’s review your situation and prepare today for tomorrow. 

Mortgages can be complicated; we are here to help you make “cents” of it.

We focus on Mortgage Solutions, Period!

To learn more connect with Ana Cruz 905.870.0513 or email at ana@askanacruz.ca