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Mortgage renewal coming up. Advice needed.

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  • Feb 21st, 2023 11:06 pm
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Feb 21st, 2023 2:57 pm
Imperatvs [OP]
Newbie
Jul 10, 2019
47 posts
13 upvotes

Feb 21st, 2023 2:57 pm

Mortgage renewal coming up. Advice needed.

Hi there. My mortgage is coming up for renewal in 4 months. I am within the early renewal period. I've not gone through a renewal process before so I have a few questions. I am currently in a 5 year fixed mortgage but thinking about going with a 5 year variable or 2 or 3 year fixed.

1) No one has a crystal ball. I understand this. But, does it make sense to renew early in this environment? I would think it's best to wait as long as possible as CPI year over year reading comes down in May/June and this puts downward pressure on fixed rates. I am not living dollar to dollar so a little risk/reward is okay.

2) My plan is to negotiate a better rate from my current lender using a competitive rate from a mortgage broker. Question is: How long can a bank and a mortgage broker keep rates locked in? Would a mortgage broker's credit check adversely affect my credit rating and therefore affect that rate I would get from the bank or vice versa? If so, what order should I do this to minimize impact? When should I do this (same as question 1).

3) How would I go about finding a good mortgage broker?
8 replies
Feb 21st, 2023 3:05 pm
will888
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Dec 12, 2009
26027 posts
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Feb 21st, 2023 3:05 pm

If I had to guess, there's probably another 50 to 75 bps to peak policy rate. This depends on how much inflation budges in the next couple of months and how impatient the BoC is with getting their job done. You are going to be renewing into a peak. I would try to get the best short term rate possible, either one year or variable. Recession or otherwise, I don't think the free money of the 2010s is coming back.
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Feb 21st, 2023 3:46 pm
Super_Chicken
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Sep 4, 2005
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Feb 21st, 2023 3:46 pm

Imperatvs wrote: ↑ 3) How would I go about finding a good mortgage broker?
https://forums.redflagdeals.com/officia ... ad-351105/
The brokers there are great at finding you today's competitive rates. After that make a call based on your own person life situation (can you stomach the risk or are you willing to pay a known amount to avoid it).

Rates are going to stay high (above 4-4.5) for the upcoming years to come. People have too much money and if BoC drops rates too early we'll see another spike of inflation that no one wants to see.
Feb 21st, 2023 5:37 pm
georvu
Deal Fanatic
Feb 4, 2015
9054 posts
5309 upvotes
Canada, Eh!!

Feb 21st, 2023 5:37 pm

Imperatvs wrote: ↑Hi there. My mortgage is coming up for renewal in 4 months. I am within the early renewal period. I've not gone through a renewal process before so I have a few questions. I am currently in a 5 year fixed mortgage but thinking about going with a 5 year variable or 2 or 3 year fixed.

1) No one has a crystal ball. I understand this. But, does it make sense to renew early in this environment? I would think it's best to wait as long as possible as CPI year over year reading comes down in May/June and this puts downward pressure on fixed rates. I am not living dollar to dollar so a little risk/reward is okay.

2) My plan is to negotiate a better rate from my current lender using a competitive rate from a mortgage broker. Question is: How long can a bank and a mortgage broker keep rates locked in? Would a mortgage broker's credit check adversely affect my credit rating and therefore affect that rate I would get from the bank or vice versa? If so, what order should I do this to minimize impact? When should I do this (same as question 1).

3) How would I go about finding a good mortgage broker?
Super_Chicken wrote: ↑ https://forums.redflagdeals.com/officia ... ad-351105/
The brokers there are great at finding you today's competitive rates. After that make a call based on your own person life situation (can you stomach the risk or are you willing to pay a known amount to avoid it).

Rates are going to stay high (above 4-4.5) for the upcoming years to come. People have too much money and if BoC drops rates too early we'll see another spike of inflation that no one wants to see.
1. Agree to wait or just get best short term offer now that comfortable with

2. Think 90 days lock is max

3. Word of mouth from other borrowers but see below as well



The brokers on that thread are no better at forecasting rates then anyone else.

Just read what they were mostly suggesting even a few months before BOC rate hikes began.

Yes, they could find competitive rates now for short term which is imho the way to go now.

Everyone should keep in mind that brokers are there to make money for themselves so not always in the consumers' best interests. There was one broker there who paid some borrowers' interest expenses when a few of us called out MCAP for dragging their feet on rate cuts but not on rate hikes. Basically hush money imho.

Also, some financial institutions do not offer mortgages thru brokers so at least compare brokers' offer with the direct to consumer offers.

There are some good brokers on that thread but no one will care for your financials more then yourself so do your due diligence.
2022: BOC raised 8 times and MCAP raised its prime next day.
2017 to 2018: BOC raised rates 5 times and MCAP raised its prime next day each time.
2020: BOC dropped rates 3 times and MCAP waited to drop its prime to include all 3 drops.
Feb 21st, 2023 9:25 pm
georvu
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Feb 4, 2015
9054 posts
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Canada, Eh!!

Feb 21st, 2023 9:25 pm

EDL67134234 wrote: ↑ @georvu can you update your signature regarding MCAP saga from 2020 onwards?
Isn't it correct from 2022 onwards, i.e. 8 times until officially announce next hike?

Date of Change MCAP Prime Rate
January 26, 2023 6.70
December 8, 2022 6.45
October 27, 2022 5.95
September 8, 2022 5.45
July 14, 2022 4.70
June 2, 2022 3.70
April 14, 2022 3.20
March 3, 2022 2.70
April 2, 2020 2.45
April 1, 2020 2.95
March 6, 2020 3.45
2022: BOC raised 8 times and MCAP raised its prime next day.
2017 to 2018: BOC raised rates 5 times and MCAP raised its prime next day each time.
2020: BOC dropped rates 3 times and MCAP waited to drop its prime to include all 3 drops.
+1
Feb 21st, 2023 10:00 pm
EDL67134234
Deal Addict
Feb 10, 2018
1837 posts
1218 upvotes

Feb 21st, 2023 10:00 pm

georvu wrote: ↑ Isn't it correct from 2022 onwards, i.e. 8 times until officially announce next hike?

Date of Change MCAP Prime Rate
January 26, 2023 6.70
December 8, 2022 6.45
October 27, 2022 5.95
September 8, 2022 5.45
July 14, 2022 4.70
June 2, 2022 3.70
April 14, 2022 3.20
March 3, 2022 2.70
April 2, 2020 2.45
April 1, 2020 2.95
March 6, 2020 3.45
Your signature looked a little out of dateFace With Tears Of Joy
+1
Feb 21st, 2023 11:06 pm
daking555
Newbie
Mar 12, 2008
80 posts
36 upvotes
Toronto/Markham

Feb 21st, 2023 11:06 pm

If your current lender is a big 5/6 bank, they will likely not compete with a external Mortgage broker. They will however compete with one another.

Most Banks are not in the business to compete with Brokers as it's a different business model. Products with Banks can also differ as you will get the advantage of having a revolving portion as a HELOC which most brokers who deal with mono lenders will not have access to.

Some banks have a broker channel, but not all so it depends

Personally I would either go variable or take a 2-3 yr fixed , not much longer. I don't see rates going back to during covid levels, but they will likely settle in the low to mid 4s eventually I think.

We have been in historical low rate environment for the past years and current rates are not that high in comparison.

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