What to do with your mortgage

Dealing with rate hikes

The question I field most often right now is “what do I do with my mortgage?”

Clients with mortgages coming up for renewal have seen rates almost triple what they were paying at their last renewal.

The prime rate went up another .25 per cent last week, which puts it at 7.2 per cent now. Clients who are sitting in variable mortgages (including myself) are continually questioning whether they should stay the course or look to lock into a fixed rate mortgage. Clients who have mortgages coming up for renewal are understandably concerned about what type of rate they will be renewing into and what their payments will look like.

Meanwhile, clients are still purchasing homes. Many seem to have confidence rates will start trending down soon. I’m seeing more clients opt for two- or three-year terms instead of automatically choosing a five-year term.

What has changed for clients who are purchasing is their maximum purchase price.

By raising interest rates, the government is trying to slow inflation. In May, we saw the annual inflation rate drop to 3.4 per cent, down from 4.4 per cent in April. That was the lowest its been since June 2021. Many people took a deep breath and felt that maybe things were turning and we were done with rate hikes for a bit.

That proved not to be the case.

If you are currently shopping for a home based on a rate hold or calculations from several months ago, I encourage you to double-check with your mortgage person to make sure you still qualify for the same size mortgage.

Rate holds are generally good for either 90 or 120 days and your new mortgage needs to finalize within that time frame. Some clients think they just need to have an accepted offer to purchase within the rate hold period and may get caught not qualifying for the same amount now.

For people in a variable rate mortgage who are debating locking in to a fixed rate, remember, you will have to choose a term that has the same amount of time outstanding as is left on your current mortgage (or longer), so please take the time to have a thorough discussion with your mortgage person to make sure this is a wise decision for you.

The mortgage world is definitely challenging for many right now. My hope is you make thoughtful, educated decisions as opposed to knee-jerk reactions.

The right decision for you is based on your financial situation and future plans. This may mean locking in for some stability with a guaranteed rate, or it may mean staying flexible if you have plans to sell or move over the next few years.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Tracy Head helps busy families get a head start on home ownership.

With today’s increasingly complicated mortgage rules, Tracy spends time getting to know her clients and helps them to better understand the mortgage process. She supports her clients before, during, and after their mortgage is in place.

Tracy works closely with her clients, offering advice and options. With access to more than 40 different lenders. She is able to assist with residential, commercial, and reverse mortgages in order to match the needs of her clients with the right mortgage package.

Tracy works hard to find the right fit for her clients and provide support for years down the road.

Call Tracy at 250-826-5857 or reach out by email [email protected]

Visit her website at www.headstartmortgages.com

Download her app: Headstart Mortgage Architects



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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