WWBD for Mortgage: 2023 Q4 edition

[ercchry]

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Is switching lenders pretty straightforward? We'll see what the conversation looks like mid-January but I've never had to bother changing lenders and want to prep myself to genuinely be ready to walk if I need to.

Yes, but also can be a PITA depending on what sort of loan and employment you’re dealing with.

Need:

Fill out a new application pull credit
Submit income docs
New insurance binder letter
Potentially a fresh appraisal

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This may be a dumb question but, if you are torn on what to do, could you do 50% fixed and 50% on variable and hedge your bets?

Yes, but only with a specialty product like manulife One… you can have multiple “sub accounts” within it and can leave a balance on the main open LOC, or locked in at different terms and fixed or variable… you of course will be paying a premium to have this luxury as their rates are not ultra competitive

[ExtraSlow]

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Is switching lenders pretty straightforward? We'll see what the conversation looks like mid-January but I've never had to bother changing lenders and want to prep myself to genuinely be ready to walk if I need to.

Easy as pie.

[max_boost]

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Man you guys are really hopeful. 5% is a fairly normal rate. We may never see even 3% for the rest of our lives.

Those were the good old days

[dirtsniffer]

my first term was variable, and I am going to stick with it when I renew in January. Tim was able to get me prime-1.2%, possibly because it is an insurance mortgage.

[arcticcat522]

I voted fixed 5 yr. I'd wait as long as possible and see of they will update the fixed rate. I don't imagine there will be more then a couple cuts in the next 5 years, but my crystal ball has been foggy lately. I agree with above we are looking around 5% for the long term

[max_boost]

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Never had a mortgage, never will ��.♂️

Renter or baller? Or both?

5% not bad but loans are like 500k vs 250k 20 years ago

[roopi]

I renewed a couple of weeks ago and went with variable again at prime -1.2%. Over the past 6 months the best they would offer was prime -0.5% up until about three weeks before my mortgage expired. At that point I told them I'm moving the mortgage because of the rate being offered. Miraculously on the last phone call they found a special offer on my account for the -1.2%.

[mr2mike]

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Bank is right. Rates comes down very soon.

https://www.canadianmortgagetrends.c...yields-plunge/

Isn't this what happened in the 80s. Ramp up, worried about recession and defaults, inflation cooled off slightly so they dropped the rates only to need to ramp it up higher a few months later to get inflation under control again?

Basically, they were more worried of sending everything to a recession that the rate cuts were too early?

So could be a repeat. If so, lock in on the dip.

[suntan]

Inflation is quite sticky. The big difference between now and then is that the market as a whole is much quicker to respond to changes. So indeed inflation could go back up really quickly.

[riander5]

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Inflation is quite sticky. The big difference between now and then is that the market as a whole is much quicker to respond to changes. So indeed inflation could go back up really quickly.

I swear if they drop rates by 1%... I'm gonna spend that $300 I get back so damn fast every month.

Gawd damnit... I won't even be able to finance my ass a new base model ford maverick with my savings!!!

[Xtrema]

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Renter or baller? Or both?

5% not bad but loans are like 500k vs 250k 20 years ago

Mom's basement?

As some Beyonders are reaching into their 50s, I'm sure some are already mortgage free or on the final stretch that rate increase doesn't really matter.

[Xtrema]

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Isn't this what happened in the 80s. Ramp up, worried about recession and defaults, inflation cooled off slightly so they dropped the rates only to need to ramp it up higher a few months later to get inflation under control again?

Basically, they were more worried of sending everything to a recession that the rate cuts were too early?

So could be a repeat. If so, lock in on the dip.

70s

[mr2mike]

I stand corrected. 70s.

Buy the dip.

[ExtraSlow]

So it's a good day to buy!

[killramos]

More please rename thread to

“Can I time the market Part 736”

[suntan]

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I stand corrected. 70s.

Buy the dip.

And the 80s.

[Xtrema]

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And the 80s.

Well some say Reagonomic worked.

The unemployment rate rose from 7% in 1980 to 11% in 1982, then declined to 5% in 1988. The inflation rate declined from 10% in 1980 to 4% in 1988. Some economists have stated that Reagan's policies were an important part of bringing about the third longest peacetime economic expansion in U.S. history.

[Disoblige]

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I renewed a couple of weeks ago and went with variable again at prime -1.2%. Over the past 6 months the best they would offer was prime -0.5% up until about three weeks before my mortgage expired. At that point I told them I'm moving the mortgage because of the rate being offered. Miraculously on the last phone call they found a special offer on my account for the -1.2%.

Damn where was this if you don't mind sharing? Best I got was P-1.05

[suntan]

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Well some say Reagonomic worked.

Canada had a tougher go at it since Trudeau Sr piled up so much debt.

Also I guess someone should tell you that 1980 is in fact part of the 80s. And if you think 4% is a great inflation rate, well then don't expect the prime rate to go down much if at all in the near future.

https://www.officialdata.org/1980-CA...9%20and%202023.

Also note how inflation started creeping up again in the early 90s and then plummeted. That was a nice recession. Are we all ready for that too? Mmm, 11% unemployment.

[tonytiger55]

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Things have obviously changed big time since the last mortgage advice thread and I remember seeing a few people mention they were up for renewal soon so thought I’d kick off an updated discussion.

I have my renewal coming up in December and here is what my current lender offered me back in September:

3y fixed - 6.34%
4y fixed - 6.19%
5y fixed - 5.59%
5y variable - prime minus 0.95% which would be 6.25% at current prime rate

I spoke to a broker and he confirmed that this renewal offer is quite competitive and would be tough to beat especially with the variable (may be able to get an extra 10 or 20 points off the 5y fixed)

I’ve been hearing talk of a recession and rates being lowered soon so I’ve been leaning towards the variable.

Interestingly, the renewal guy reached out to me again and asked where I’m at, and I mentioned I’m 50/50 between the 5y fixed and the variable. He just got back to me this morning at said he was able to improve the variable to prime minus 1.1% which would put it at 6.1%

At face value it sounds good, but I can’t help but wonder why they would make this move to essentially push me over the edge to go with variable. I’m probably way overthinking it but here’s what’s going through my mind:
- do they know something I don’t? Did they offer me too good of a deal for a 5y fixed back in September?
- are they just simply trying to reduce overall risk by not having too many fixed mortgages on their books?


All that said, what would beyond do if you were signing up for a new / renewing an existing mortgage in the next month or two? Added a poll

It depends what your long term plan is? Are you planning to pay off the mortgage early? Sell etc?
So as long as you can make the payments that should be the primary focus and your variance in that.

I don't trust the finance minister at all, so I re-evaluated my financial plan for the next two years. Changed what I wanted to do with my life and property. I then jumped to fixed rate earlier this year at 6.09%. That fits within my financial plan. This was at the time when the rates kept going up. Everything else outside of this is just noise.

I would ask, start with a plan of what you want to do. Then do the financials around that. The 6.34% or 5.59% does not mean anything. You can't time the market.