In November, Royal Lepage released their 2023 Mortgage Renewal Survey. Here is a staggering highlight: "31% of all mortgagees in Canada say their lending agreement is set to renew within the next 18 months, meaning that 3.4 million Canadians have a mortgage set to renew by March 2025."
Out of the respondents surveyed, over 74% of them are worried about being able to afford their mortgage payments as they will most likely go up, given the current rate environment.
How much will they go up? Well, let's look at the numbers.
If you took out a $300,000 mortgage in 2019 at a rate of 3.64% amortized over 25 years, your principal and interest payment would be $1,520.06/month.
Fast forward to 2024. Your mortgage is coming up for renewal, and assuming you made monthly payments, you would owe $259,499.57 and have 20 years left to pay on your mortgage.
Using a rate of 4.99% for a 5 year term, your payments would be increasing to $1,703.84 /month. That is an increase of $183.78/month.
Thankfully, we have seen fixed interest rates steadily decreasing since December, and let's hope that trend is going to continue. With the Bank of Canada holding rates steady today that gives me hope that rates will continue to come down.
Another positive? With that many renewals coming up, the competition for banks and mortgage companies to retain your mortgage is going to be fierce. You may have already gotten calls from your existing mortgage lender with a rate offer and the option to lock in that rate TODAY.
The catch? If you sign today and rates come down, your bank may not allow you to take advantage of the lower rate, and, well, that would just be yucky.
What do you need to do right now? Reach out to our team and have a conversation with us about your situation and what is your biggest concern right now. We want to help.