How to deal with shocking mortgage renewal rates

If your mortgage is coming up for renewal, you might be feeling a little anxious about today’s renewal rates. Many Canadians are facing unbelievable rate hikes compared to their current mortgage rates. While this is not surprising, it is still unwelcome. Here’s how we recommend dealing with your mortgage renewal this season.

Renewal time means higher rates

Renewing your mortgage in 2023 may come with an unpleasant price. After nearly two years of aggressive interest rate hikes, our current overnight rate is five per cent, with the retail prime rate at 7.20 per cent. These figures are much higher than any rate home owners would have secured when they were approved for their mortgage five years ago, for example. If your mortgage is coming up for renewal, this means you should expect rate offers that may be up to double your current rate. This is especially shocking for borrowers with fixed rates, who will be jumping into much higher renewal rates than they are used to.

Don’t automatically sign the offer letter

Most borrowers assume they should sign the offer letter their current lender sends them with their new renewal rates. After spending years with one lender, many home owners feel a sense of loyalty or even forget they may have other options. However, we recommend you take some time to browse other possibilities. Renewal letters are sent out months in advance, so you are not in an immediate time crunch to sign off. You have room to explore other lenders and rates. 

For some borrowers, sticking with their current lender is the right thing to do. For others, a switch is the better choice. Sites such as Ratehub can quickly compare different lenders and their rates, allowing you to see where your current lender stands. Of course, you shouldn’t make any decisions without the help of an objective third party. That’s where we come in!

Use a mortgage broker

Mortgage brokers do not favour one lender over the others, and they are obligated to present borrowers with the best option for their situation. Brokers have access to several lenders, including large banks and smaller financial institutions. Often, we work with lenders that borrowers cannot access unless they use a broker! When you meet with a mortgage broker, you will have the opportunity to learn more about different lenders and which one might be best for you. This ensures you can make a decision that suits your needs at renewal time.

No matter what, renewal rates this year will be higher than they were when you secured your first mortgage rate. This can be stressful, especially in a time of high inflation and costs of living. However, using a mortgage broker means you can find the best choice out there! Brokers are here for you throughout your entire mortgage journey, and you will always have support. If you have any doubts about your renewal, it’s essential to reach out ahead of time to chat about your options.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.