2018 is the year of mortgage renewals in Alberta! This has been Mortgages for Less’ busiest year with mortgage renewals. A CIBC Capital Markets report says that an estimated 47 per cent of all existing mortgages will need to be renewed this year. A normal year sees 25 to 35 per cent of mortgage renew.
Why is this happening?
The increase in mortgages up for renewal in 2018 is an unintended consequence of various rounds of regulatory changes that were designed to reduce mortgage risk that made it harder for home-buyers to qualify. Many borrowers have taken on two or three year mortgage terms in the last five years which are coming up for renewal along with the more typical 5-year mortgages taken out in 2013 according to Ian Pollick, a TD Securities Bond Trader.
What does this mean for me?
New lending rules introduced January 1st are impacting some borrowers looking to renew, but Mortgages for Less has found that the majority of our clients are not impacted by these rules with their renewals. High Ratio mortgages taken out before October 2016 are further unimpacted by the changes as they have been grandfathered under previous guidelines.
Interest rates have increased over the past year so those renewing now will usually see higher rates than they have had for the past five years. That said, variable rates are still often available at 2.45%* and lower, which is most of a percentage rate lower than the more popular 5-year fixed rate mortgage rates starting at 3.24%* today.
What should I do?
Our advice to all our clients and those we talk to is to reach out up to four months prior to your renewal to see what options will be available. Starting four months early will make sure we have the entire four months to snag the lowest rate for you. If you wait for your renewal notice from your bank or mortgage company, those typically come out five weeks before your renewal, and you may miss out on lower rates available earlier. Interest rates have been rising and may continue to do so, and locking in earlier is often a good idea.
Additionally, we have found for much of the last year that mortgage rates offered by our non-bank lending partners have been lower than those offered by the major banks in most situations for most of the last year. Especially if your mortgage is with a major bank, please reach out and we can (usually) save you money.