Ultra-Low Interest Rates
Jen & Cory • September 22, 2020
Chances are if you’ve been paying attention to the news as the Canadian economy continues to work through the COVID-19 pandemic, you’ve heard that interest rates are at an all-time low. And it would appear that they will remain low for a while. In fact, the Bank of Canada recently hinted that they don’t expect rates to go up until at least 2023. That’s good news if you need to borrow money!
So what does this mean for you?
Well, if you are borrowing money for really any reason, you’ll most likely be paying lower interest for the foreseeable future, including any secured line of credits, car loans, student loans, and personal loans. As for mortgage financing, you’ve got options!
If you’re an existing variable rate mortgage holder,
the prime rate is currently 2.45%. You are paying that, plus or minus a component to prime. The variable rate spread is presently coming down at several lenders, so if you’d like to have a look at your mortgage to see if a refinance makes sense to save you money, please contact us anytime.
If you’re a fixed rate mortgage holder,
this means there could be a pretty significant penalty for breaking your existing mortgage. However, depending on the time remaining on your current term, and the rate you are currently paying, it might make sense to break your existing mortgage, pay the penalty, and refinance into a lower rate. There is no cost to run the numbers. If we can save you money in the long term on your mortgage, it might make sense to refinance. Now, depending on the terms of your mortgage, it might make sense to wait a year or two to refinance, but we won’t know that until we look at the details. We are more than happy to provide you with several financial scenarios.
If you’re currently looking to purchase a property
and you’re seeking new mortgage financing, you should know that although interest rates are at an all-time low, the government of Canada forces you to qualify at what they call the qualifying rate which is currently 4.79%. So while you can find a five year fixed rate around 2% now, you have to prove that you can afford double that amount in interest. The idea here is that it protects you against a rate hike when your term is complete. Unfortunately, it leaves you qualifying for a considerably lower mortgage amount now.
So is now a good time to refinance or buy?
Well, that depends on your financial situation. But there is nothing wrong with taking a look and putting together a mortgage application to assess your situation. We would love to work with you so that you can take advantage of these low interest rates. Please contact us anytime!
Recent Posts
Why a Mortgage Pre-Approval Protects Both Your Head and Your Heart There’s no denying it—buying a home is an emotional journey. In a competitive market, it can feel like you need to stretch beyond your comfort zone or bid above asking just to have a chance. That pressure can make it hard to separate what you want from what you can realistically afford. One of the biggest pitfalls buyers face is falling in love with a home that’s outside their price range. Once that happens, every other property seems like a compromise—even the ones that might have been a perfect fit otherwise. The best way to avoid this heartache? Get pre-approved before you start shopping. What a Pre-Approval Does for You A mortgage pre-approval gives you more than just a number—it provides clarity, confidence, and protection: Know your buying power : Shop within your true price range and avoid disappointment. Spot potential roadblocks : Uncover issues like credit bureau errors before you make an offer. Get organized : Learn exactly what documentation you’ll need so there are no surprises. Lock in a rate : Many lenders hold your rate for 30–120 days, giving you peace of mind if rates rise. Save yourself heartache : Protect yourself from falling for a home you can’t afford. Head vs. Heart Buying a home is about balance. Your head tells you what’s financially sound, your heart tells you what feels right—and both matter. A pre-approval helps bring those two sides together, so you can make confident choices without emotional stress clouding your judgment. The Bottom Line Looking at properties for fun is one thing—but if you’re serious about buying, a pre-approval is the smartest first step you can take. It sets realistic expectations, saves time, and protects your emotions along the way. If you’d like to explore your options and get pre-approved, I’d be happy to walk through the process with you. Let’s make sure you’re ready to shop with confidence.
Co-Signing a Mortgage in Canada: Pros, Cons & What to Expect Thinking about co-signing a mortgage? On the surface, it might seem like a simple way to help someone you care about achieve homeownership. But before you sign on the dotted line, it’s important to understand exactly what co-signing means—for them and for you. You’re Fully Responsible When you co-sign, your name is on the mortgage—and that makes you just as responsible as the primary borrower. If payments are missed, the lender won’t only go after them; they’ll come after you too. Missed payments or default can damage your credit score and put your financial health at risk. That’s why trust is key. If you’re going to co-sign, make sure you have a clear picture of the borrower’s ability to manage payments—and consider monitoring the account to protect yourself. You’re Committed Until They Can Stand Alone Co-signing isn’t temporary by default. Even once the initial mortgage term ends, you won’t automatically be removed. The borrower has to re-qualify on their own, and only then can your name be taken off. If they don’t qualify, you stay on the mortgage for another term. Before agreeing, talk openly about expectations: How long might you be on the mortgage? What’s the plan for eventually removing you? Having these conversations upfront prevents surprises later. It Affects Your Own Borrowing Power When lenders calculate your debt service ratios, the co-signed mortgage counts as your debt—even if you never make a payment on it. This could reduce how much you’re able to borrow in the future, whether it’s for your own home, an investment property, or even refinancing. If you see another mortgage in your future, you’ll want to consider how co-signing could limit your options. The Upside: Helping Someone Get Ahead On the positive side, co-signing can be life-changing for the borrower. You could be helping a family member or friend buy their first home, start building equity, or take an important step forward financially. If handled with clear expectations and trust, it can be a meaningful way to support someone you care about. The Bottom Line Co-signing a mortgage comes with both risks and rewards. It’s not a decision to take lightly, but with careful planning, transparency, and professional advice, it can be done responsibly. If you’re considering co-signing—or want to explore safer alternatives—let’s connect. I’d be happy to walk you through what to expect and help you decide if it’s the right move for you.
