Well despite the frosty start to April and a supposed spring – there is no doubt that things in the mortgage industry have thawed quite nicely. In fact – I would go on to say that we are now entering another spring market where fierce competition with mortgage interest rates or the coined “Rate Wars” will benefit the consumer. Here’s why.
Mortgage Rate Competition
In every industry – having more options for the consumer than less are always better. In the Canadian mortgage lending landscape today we have approximately 50 lenders in the institutional pool. This provides a lot of choice to the consumer. This spans everything from Schedule 1 Chartered banks to trust companies, credit unions to the mortgage only lenders. From an international point of view – Canada is still very attractive with low interest rates, real estate still holding its value, and the fact that Canadians pretty much always pay their mortgages on time. This means more money wants to be lent here. With the added pressure of the spring real estate market – we have a perfect storm for the natural effects of competition to cause these lenders to reduce their rates in order to get more of the mortgages available. In this the consumer wins.
Will Toronto Interest Rates Rise?
This is the question on everyone’s mind. We all know that we are at historical lows for interest rates. This is exacerbated today with the effect of competition. The U.S. Federal Reserve is promising near-zero rates for two more years. Canada’s interest rates may raise sooner, but very slowly. In fact, many industry experts believe that it is the best time to be in mortgage debt and to not take advantage is missing out on the best opportunity to come in the last 100 years. I have clients who took out a five year fixed mortgage just last year at 4.6% who we just refinanced into a 2.89% interest rate and even with a 21K penalty they will still be ahead by 14K over the remainder of the original term. Crazy right? The majority of mortgage holders in Toronto today would benefit from a review of the math to seize the opportunity these rates are providing.
How To Win The Interest Rate War
There is a short window of opportunity to take advantage of the forces that be and save your family thousands of dollars over the coming years. Take the time to review your mortgage contract – even if you have 3 or 4 years left? I know it sounds crazy but when the math is presented – large penalties are overcome by the savings made to your monthly payments over the remainder of the term. Once the heat comes off of this spring market – this opportunity will also vanish. This doesn’t mean that rates will rise but the discounts available will subside. Once you have completed your review of your existing mortgage contract – reach out to me and we can go over the numbers together and see what your family will save. You may be surprised to find a Disney trip or new car has been hiding in your mortgage this whole time waiting for you. Hit me with your questions below.