Caroline Lennox

Are Canadians complacent about mortgage rates?

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Caroline is a Mortgage Broker with Invis in Victoria, BC and also a mentor with the University of Victoria Business School. Prior to her current role, Caroline worked in both the private and public sector in senior management roles and also sold real estate for 5 years. Her experiences as a female CEO in the wireless sector inspired her to support women who want to reach C-level positions. Her transition to mortgage brokering was inspired by her love of the real estate industry and vision of how she can support borrowers in optimizing their finances for success.

In my opinion, yes.  When I tell people there are opportunities to lock in for 10 years at 3.99% to avoid sticker shock  at renewal  time, or suggest that they could get a free down payment mortgage for 5.24%, or get 3% of their purchase price back with a cash-back mortgage at 4.09% to tame their debts, I am frequently hearing “That’s a lot!  I want a 5 year at 3%”.

Let’s look at some history:

1. When I was selling real estate back in the 90’s, I had to buy a new amortization schedule book when rates went down below 7%. People were ecstatic!

2. Since 1981, the average 5 year mortgage rate is 9.02%.  The average Prime rate is 7.75% and the average 5- year bond yield rate is 6.87%.
Take a look at the following graph and tell me when, if ever, rates will be this low again in our lifetimes…

Historical Mortgage Rates
Historical Mortgage Rates

Add in the new bonus incentive from the government of British Columbia for 5% cash in your pocket (up to $10,000 of the purchase price on  newly constructed home) and it is like free money. Some conditions apply, but it is worth the time to learn more.  Although you can’t use this directly as a down payment, if you receive a non-repayable gift from a direct family member for your down payment, there’s no reason you can’t re-gift it back after your sale completes!

If you have a mortgage now and are in your home for the long term, locking in for 10 years could save you thousands and after the end of the 5th year, penalties to get out of it are minimal.

If you have the means to handle a mortgage, but are short on a down payment or closing cost, or have some debts to pay off, a cashback product might be your answer at today’s rates.  I wouldn’t be saying that if rates were higher.

Keeping in mind that both the borrower and property must qualify for these mortgages, this is still a phenomenal time in history. What might be lacking is consumer in confidence. When is the right time for you?

Caroline Lennox
Mortgage Broker and iLease Financing Professional
 Invis – Canada’s Mortgage Experts™
Visit Caroline’s website

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