Achi news desk-
More than two million Canadians will renew their mortgages over the next year and a half. CTV News asked more than 50 mortgage brokers across Canada how to get the best mortgage deal. This is what we found.
Jamie Goren expects that when he renews his mortgage in November he may pay more than ever before.
He moved into his Dollard-de-Ormo home in 2002 with an interest rate of 4.35 percent. In the last four years it was 1.69 percent.
“I would give my left arm to get 1.69 percent again,” he told CTV News. “I’d even be thrilled to get a 1.69 percent multiple, but I don’t even see that happening.”
He recently received a letter from Scotia Bank saying he was offering 5.09 per cent. Goren expects that it could cost him thousands of shekels every year.
Monthly mortgage payments in Montreal are now more than $1,500. Broker Brad Wigensberg says he’s seeing more cases of people struggling to keep up with payments.
“A lot of what we’re seeing now is people trying to buy houses, especially young people, working two or three jobs,” he said.
According to a CTV News survey of mortgage brokers in Quebec, the best rates they could find for a fixed mortgage are 4.69 percent and 6.5 percent for a variable mortgage. In 2023 there were more than 75,000 home sales in Quebec.
Average monthly mortgage payments for Montreal. (CTV News)
While the market has cooled, there is still strong demand for homes below a certain price, Wigensberg said.
“Houses here in Quebec under $450,000 are still going to grow because the demand is there. We have a lot of immigration coming in and people need houses. The upper-end houses have stalled, the values have stalled,” he said.
(Gary Munson/CTV News Graphics)
Goren, like many other homeowners in Quebec, is now worried about how much the Bank of Canada interest rate will cost him.
“At the same time, taxes are going up, groceries are going up and the cost of living has never been higher,” he said.
Answers to the CTV News mortgage broker questionnaire
Name of the broker: Brad Wigensberg
Broker company: Rise Mortgages (Division of Architect Mortgages)
Note: All questions are based on a typical Canadian household remortgaging.
Question #1: What is the best type of mortgage right now and for how long?
variable rate | Fixed rate | It depends |
3 years fixed |
There is no right answer for the variable or fixed option, both options are poor options given the rate reductions expected in the next 3-4 months. Clients can take out a variable and hope to lock in a 3-year closed at 4.49% or so within 6 months once rates drop, but with a variable at prime -1% or so (6.20 vs 4.99%-5.19%).
Question #2: What’s the best rate you can get right now? (specify rate and length of term)
variable rate | Fixed rate | It depends |
Prime – 1.05% on the insured | 4.99% 3 years or 4.69% 5 years insured |
Currently there is a variation of 0.30-0.80 depending on lenders from insured to conventional transactions. Let banks increase their cash supply to cover arrears and foreclosures, the cost of a conventional versus insured transaction is at an all-time high. In insured transactions, the bank is backed by the insurer who guarantees the value of the property, so that they can lend with confidence.
Question #3: Should I get out of my variable mortgage if I have one?
Yes | No | It depends |
X |
It all depends on your rate. If you have a prime – 1% or more, then staying in variable is an option as you are close to the low 6 to high 5 rate. If you are in something higher, it depends on the rate your bank offers as a replacement bank can be a big penalty as 3 months interest in About 6.5% is big.
Question #4: Should I choose a longer amortization period?
Yes | No | It depends |
X |
With the current mortgage shock payments happening, an extended amortization allows you to have a safe monthly payment that you can manage, but gives you the options of prepaying or increasing your payments to offset the longer amortization.
It will also allow you – when the higher rates come down and you are renewing – to continue with the new payment you are used to and it will shorten the amortization time in 3 to 5 years compared to trying to be a hero now and ending up with credit card or credit line debts that are much higher.
Question #5: Can I rely on a bank for advice on renewing a mortgage?
Yes | No | It depends |
X |
All advice is simply – advice. There is no guarantee of the advice given unless all parties agree that the direction given should be the right decision in the long run. Experience of some consultants is also a huge question mark.
Question #6: What advice would you give to anyone interested in renewing their mortgage?
Don’t just take your current lender’s offer. First, look at the rate offer and see if it is comparable to the current market offers, then see if you can afford this payment or if you need to extend the reduction to make your payments more affordable.
Given that OFSI has previously set stress tests at 4.79% – 5.25% between 2018-2022 and customers can go up to 44% debt load (monthly payments vs. income) and now rates are higher than the 5.25% stress test rate with high income customers More people take home only 50% after tax income, the remaining 6% to fulfill debts that are not calculated in the equation (fuel, food, insurance, 50% of rent in most cases, cell phone, entertainment, internet, drinks, clothes) Most Canadians will be forced to borrow with cards and by other means, which will increase the debts of Canadian households. Given the new stress test, most people will not be eligible to recycle and redefine.