If you asked me the last week of September, I would’ve told you that the chances that Canada would be part of a new NAFTA were 50/50. Fast forward a few days later and it looks like our team did a good job of holding their ground, and, we do have a deal now! Why this matters from a mortgage rates perspective is simple. No NAFTA would’ve meant our economy would’ve had a dramatic turnaround, and rates would have stayed put or even gone down. Now, with NAFTA (or, USMCA – the new name), it appears we should prepare for higher interest rates towards the end of 2018 and beyond.
How? How do we do this? Here’s a breakdown of those who will be affected (you’ll figure out shortly that it’s really everyone and anyone who is borrowing money).
If you are contemplating buying a property in the next 4-6 months, you should lock in some rates with a pre-approval. Although 80% or so of pre-approvals do not fund by their expiry date, and, you shouldn’t make your house purchase strictly based on interest rate (it should be the 10th thing that matters), getting a good rate amidst rising rates is a good thing. So, let’s do it. We gotta talk.
If you already bought something but haven’t closed yet, consider moving to fixed unless your situation is one where your income will rise steadily, you’re not borrowing the maximum allowed, and you can afford payments 1% higher than your existing payment. Then going variable makes sense. If you’re looking for security, go fixed. We should talk.
If you already bought, and closed, and have a variable-rate, then we should discuss 1. what is your current discount from prime, 2. what are your short- mid- and long-term objectives, and 3. what rate can we get from your current and other lenders. Variable-rate mortgages are cheap to break. We should talk.
If you have a HELOC and you’ve treated it as a piggy-bank, we should talk. Your payments on the interest-only component will start to go up again, once rates rise. Your lender COULD ask you to start paying down the principal. So let’s do a collateral mortgage switch where we move over your mortgage AND HELOC in one umbrella at the best market rates. Gotta talk here!
If you’re an investor you should see how much your payments will change your investment picture. Will higher payments mean your property is now cash-flow negative? Will rents cover your costs? Are you about to sign a new lease with a new tenant? Will you be selling soon? Rising rates will affect you so, we should talk.
If your mortgage is renewing in the next 12 months we absolutely must talk. I have to know when, where, how, and what your plans are. If I know that, we can figure out if it makes sense to break that fixed-term early and get on to a new term asap, for a longer period, at these lower rates.
The general theme here is, it’s time for us to talk. Click on that link, book a time, and, let’s figure out your 2018 mortgage plans – and beyond!