Mortgage Renewal Rates in Canada

If you’re a homeowner in Canada, you’re likely familiar with the concept of mortgage renewal rates. When your mortgage term comes to an end, you’ll need to renew your mortgage at a new interest rate. Most of us spend a lot of time and effort shopping for an initial mortgage, the same is generally not the case when looking at home mortgage renewal rate. By omitting proper consideration at the time of renewal, you could be losing thousands of dollars every year by not adjusting your home mortgage.

STAT: Nearly 60% of homeowners simply sign and send back the renewal that is first offered to them by their lender, without ever shopping around for a more favorable interest rate. At The Place to Mortgage, we work with a range of lender partners to help clients compare renewal options.

What Are Mortgage Renewal Rates? Mortgage renewal rates are the interest rates available when your current mortgage term expires and you renew your mortgage. When you first take out a mortgage, you’ll agree to a specific term, such as five years. At the end of that term, you’ll need to renew your mortgage at a new interest rate. This rate can be higher or lower than your current rate, depending on market conditions.

How Are Mortgage Renewal Rates Determined?

Mortgage renewal rates are influenced by a variety of factors, including the Bank of Canada’s overnight lending rate, the bond market, and the lender’s own cost of funds. When the Bank of Canada raises or lowers its overnight lending rate, this can impact mortgage rates. Similarly, when bond yields rise or fall, this can also affect mortgage rates. Lenders also consider their own cost of funds when setting renewal rates.

What Can You Do to Ensure You Get the Competitive Rate Options?

1. Start Early: Don’t wait until the last minute to renew your mortgage. Start shopping around for rates several months before your current term ends.
2. Shop Around: It can be helpful to compare renewal options instead of automatically accepting the first offer provided. Shop around and compare rates from different lenders to ensure that you’re reviewing available options.
3. Negotiate: Don’t be afraid to negotiate with your lender. If you’ve been a good customer and have a good credit score, you may be able to negotiate a better rate.
4. Consider a Mortgage Broker: A mortgage broker can help you shop around to compare available rates and financing options on your behalf.
5. Consider Your Options: When renewing your mortgage, you may have the option to switch to a different type of mortgage, such as a fixed or variable rate. Consider your options carefully and choose the one that best suits your needs and budget.

What Happens if You Don’t Renew Your Mortgage?

If you don’t renew your mortgage, your lender may consider your mortgage to be in default. This can result in penalties, additional fees, or an automatic renewal into a less competitive rate. It’s important to renew your mortgage on time and to ensure that you’re getting the best rate possible. Mortgage renewal rates are an important consideration for homeowners. These rates are influenced by a variety of factors, including market conditions and the lender’s own cost of funds. To ensure that you get the best rate possible, start early, shop around, and consider your options carefully. Working with a mortgage broker is a great way to find the best deal. By taking these steps, you can renew your mortgage with confidence and help you review suitable renewal options for your situation. If your mortgage is less than four months away, please contact us immediately to get started on your renewal.