Date: September 23, 2023

Category: Newsletter

Kids are now back to school as we head toward the end of 2023.

For many, this has been the slowest, fastest year, and many current homeowners have felt every single step of this year, with rates rising and strategically preparing for their upcoming mortgage renewal. 

Homebuyers looking for a new home have also felt the change in the air, as many had pre-approvals that expired before they found homes, and those lower rates have disappeared. It’s been a challenging year for all, but let’s put our energy and focus on the future with positivity and preparedness.

You know I’m a realist; I won’t sit here and tell you everything is sunshine and roses when we are in a challenging situation. In times like these, it’s more important than ever to focus on a few key things;

Creating and sticking to a budget (I can hear my parents chirping in my ear now, saying, “It’s not about how much you make but how much you save.” Don’t tell them, but this still stands! So get out your budgets and follow them. If you need a budget, message me, and I will send you ours.

Current homeowners: prepare now for your upcoming mortgage renewal. If your existing mortgage started between 2019 and 2020, we need to review your plan for renewal. It will be here sooner than you think. 

Homebuyers, I realize I sound like a broken record, but here’s the thing. Getting a pre-approval is so important for two primary reasons.

  1. It will hold that rate for 120 days, and in a market where the rates are constantly changing and increasing, you want to ensure you lock in a rate. 
  2. A pre-approval will give you a budget and buying power as of today, and this is also the time we plan for what comes next. If the rate goes up, how will this impact your purchasing power or ability? 

With so much talk about what’s happening in the world about recession, rates and inflation, it’s hard to focus on what’s what, so here are some facts:

  • Inflation rose from 3.3% to 4%; this is more than expected, as experts predicted a 3.8% possible increase.
  • For the second time in a row, a surprise in increased inflation numbers puts the Bank of Canada in a bind, and more increases are likely to come.
  • Experts suggest we will see one more 0.25% rate increase by year-end and NO rate cuts in 2024. Time will tell, but I will err on the conservative side and agree with this statement. If we see a decrease, it will be toward the later part of 2024
  • We are currently living through the lowest level of mortgage growth since 2001
  • House prices have risen 7.2% since the March lows, but the fun is over as experts tell us to expect price declines in the coming month.  
  • In its economic and housing outlook release, Oxford Economics forecasted a mild recession by the end of the year will lead to an additional 10% decline in average house prices by early next year.
  • Mortgage arrears are only expected to rise modestly to 0.23% by mid-2023 from 0.17% at the end of 2023. 
  • The need for second mortgages has increased over the last year, with many homeowners requiring access to the equity in their homes to support the higher cost of living and rising rates.
  • As expected, fixed rates are once again dominating the mortgage landscape. Albeit, we are expecting fixed rates to climb higher once again by another .20-.30% 
  • The Government of Canada Bond yields are currently at a 16-year high – this is important as this is the main factor that drives fixed rates.
  • Many homeowners are opting for three- and four-year fixed rates, with higher rates, but they are hopeful that renewal rates will decrease within the next three to four years. 
  • For those of you looking for the rates to go down, let me leave you with this. Historically, it’s taken about ten months for rates to drop once we have seen the last rate increase. 

It seems a longer-than-expected recovery appears to be in the cards for Canadians.

Planning now for tomorrow is key!

There needs to be more certainty in the future of mortgage rates and home prices; as you can see from the chart below, not even the Big Six banks can agree on a possible future projection. My advice is to have the hard conversations now; let’s plan NOW for the coming 2-3 years, and with planning, we won’t panic. 

Understanding Second Mortgages

I want to address second mortgages to demystify the idea that having a second mortgage means you have done something wrong or managed life poorly; this is not the case.

Second mortgages exist because this type of product is often needed. I want to explain why someone would need or want a second mortgage. 

What is a second mortgage?

A second mortgage is placed in second position behind your current first mortgage. This usually means you have two registrations on your home: mortgage #1 and mortgage #2

Why would I add a second mortgage to my home?

  • A second mortgage can be used to access equity in the home when it doesn’t make sense to break the current first mortgage due to penalty and rate.
  • In times like these, many clients are looking to second mortgages to help offset the increase of the first mortgage renewal. In this case, they are taking a second mortgage to help with cash flow.
  • The second mortgage is often a band-aid until an event happens, meaning the sale of a home, inheritance, and life change. 
  • Second mortgages are typically a short-term product.

Things you may not have known about second mortgages

  • A second mortgage is typically in the form of a line of credit or private mortgage (but not always)
  • Depending on the loan to value (equity in the home), you can often set up a private mortgage with no payment, meaning payment can be built in for one year. Give many the needed breathing room to make decisions.
  • Second mortgages are typically one-year terms. 

There is so much more, but this is meant to give you a little glimpse into why someone would choose a second mortgage. If you have questions, connect with us. 

As always, I hope this insight helps guide you along this very fluid market, and I ask that you please share this with your friends and family. We must support each other with information, knowledge and support during these times. 

If you want to discuss any of the above further, connect with me by clicking this link.

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