I came across this article in the Financial Post today that confirms some of the things I have been writing previously, and makes some interesting points about clients renewing their mortgages, and the handcuffs that the changes have placed on those renewing their mortgages that they qualified for with the looser mortgage rules previously.
One very interesting point to the article was that 78% of mortgage borrowers renew with their current lender. It is my belief that the majority of these borrowers do not find out what the best market rates are when it comes up to renewal time and are paying a much higher rate of interest. It would make sense to renew if you cannot qualify due to a job change or possible equity issues, but I have had a good success rate at getting approvals on those applications, and many times borrowers who are renewing would like to consolidate some debt into their mortgage, which you can still do even high ratio if you have at least minimal equity.
The article also talks about the possibility of home prices decreasing due to the mortgage rule changes. I do find this interesting, and it would be in keeping with what we saw in the autumn of 2008 when they made the last set of major lending changes. However, the humourous part of people is that they didn’t want to buy when the market was going down, and they didn’t want to buy when the market was down, and they wanted to wait until after the olympics when prices were “supposed” to be down. Then, prices go up sharply due to everyone getting into the market at the same time and many people lost an opportunity and in addition have a difficult time finding something that they like because there are so many buyers out there and they cannot find any real deals on a place they would really enjoy living in.
I think if history serves as an indicator of what may be happening, if I were a home buyer and I read in the newspaper that sales are down, that would serve as a green light indicator to BUY! Particularly if the purchase is going to be fairly long term and the intention is to live in the home.
One of the things I like most about what I do is that I have the flexibility and choice to be able to place people in mortgages that the borrowers often wouldn’t be able to get from their bank, and quite often at better rates than their bank would offer. I provide my knowledge and expertise as a value-added service to enable clients to make sound choices when purchasing a home.
If you are renewing your mortgage, you should do so with your eyes open. Call me today or fill out the form below and let’s see what we can do to help you.