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Fixed or variable Mortgages advice for Canadians up for renewal · Kvetch & Release

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  Big boats. We're back John Leckey here on AM eight hundred CKLW. I
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  hope you're all doing well. Thank you so much again to Ward nine Councilor
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  Kieran McKenzie and Windsor to come see MPP Andrew Dowie for both joining me there
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  for a bit of an impromptu informal debate on the consumption treatment site closure or
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  temporary closure here in Windsor, what that means and where things are going at
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  the provincial level. It was lively, to say the least, but we're
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  shifting gears here. For most Canadians, a mortgage is the biggest loan that
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  they're ever going to take on in their lifetime. Following the Bank of Canada's
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  historic rate hike cycle, the cost of borrowing money has put a significant strain
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  on households across the country, and over the next year and a half,
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  forty four percent of all mortgages will be up for renewal in Canada. That
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  is a lot almost fifty percent. What does it all mean? Fixed mortgages
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  or variable mortgages? These are probably questions that at least have of you listening
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  have in your head right now. And we thought it was apt to give
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  you some mortgage advice, not from me, rather from an expert, someone
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  who knows this. We're bringing on right now, mortgage specialist Ron Bondy Ron,
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  good morning, Good morning. How are you doing today? Doing well?
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  Thanks? If I'm holding a mortgage right now, am I feeling good
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  about things? Or bad about things? If I'm coming up for renewal?
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  If you're coming up for renewal, you're probably pretty stressed out right now because
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  the rates have gone up approximately about probably three times of what you're locked into
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  right now. So a lot of questions and a lot of decisions to be
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  have when you're up for renewal. So what does this mean when people are
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  looking at whether or not they want to go in for let's say a renewal.
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  Let's say that they purchased in I don't know, at the lowest of
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  the pandem, like okay, at zero point yeah, so yeah, bank
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  rate of zero point two five percent, which means that they've probably locked in,
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  uh, in the low two's, the high ones one percent for a
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  mortgage they're coming up for renewal now, they they'll be in the low fives
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  for a renewal. So that's quite a bit of difference and quite a bit
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  of change in the payment. Now, Uh, what this is going to
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  affect is people moving banks to get a better rate, because you can as
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  long as you're not in default status and haven't missed the mortgage payment, the
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  banks will renew you without requalifying you, but at whatever rate they offer you.
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  So but a lot of people like to, you know, move move
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  their mortgage from bank to bank on renewal to get a lower rate. So
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  you know, it's going to limit a lot of people. But people do
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  have options. So if obviously their payment is going to probably double, ways
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  around that is you can refinance your house and reamortize out your mortgage. So
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  basically maybe you just rented for the last five years, but hey, you
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  get to stay in your house and still be affordable and still be able to
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  live well. And that's I think one of the biggest things for people is
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  wanting to be able to you know, stay where they are. They purchased
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  a house for a reason that they like where they are. But it still
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  is very complicated and determining exactly which, you know, type of mortgage you
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  want to do, well exactly there's so many options out there. In so
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  many opinions. The reality is every case is different and you really can't give
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  a blanket statement for everybody. So you know, like a lot of people
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  are like, oh, should I take variable now? Since as of today
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  the Bank of Canada finally lowered a quarter percent as of this morning, should
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  I take variable now? Well, there's still is quite a huge spread between
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  the Bank of Canada rates and the fixed rate, So a lot of people
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  don't know that the two are not tied together, that the fixed rate goes
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  off the bond yield and the Bank of Canada rate determines a darable rate.
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  So there's still a huge spread. So we still wouldn't really recommend a variable
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  unless you said I wanted to do a one year If you're doing a one
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  year term, well at that point I would recommend a variable because the variable
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  will actually be cheaper than a one year term. And then there are people
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  that you know, well, maybe I should go in a two or three
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  year because in two to three years, everybody expects that the that the rates
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  are going to come down, which is true, we expect that as well,
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  but you're for those two or three year term, you're paying a higher
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  mortgage interest rate, so your payment is going to be higher, which means
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  if you're buying a house, your affordability is going to be lower. So
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  it really depends on everybody's needs. So five year is still always the cheapest
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  fixed rate to get, and if you take a five year fixed rate,
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  then that's your most affordability, and you have prepayment options that you can increase
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  your payment to what you were what you could have been paying if you took
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  a two or three year, so that way you're ahead on your mortgage.
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  So if the interest rate did drop in two or three years and you took
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  a five year at the end of the five year, you would still be
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  ahead if you took a two or three year and paid the higher interest rate.
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  So there's different options for everybody. You need to talk to a qualified
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  professional and help them do the math for you. Do you find that with
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  the vast majority of people that this this goes way over their heads? It
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  does? Yeah, yeah, for sure, because you know everybody's just used
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  to listen to the media and what is the Bank of Canada doing? Right,
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  What is the Bank of Canada doing? Bank of Canada the lower rates
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  today, So that's going to get people off the sidelines for shopping, but
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  that doesn't affect the fixed rate. And approximately eighty percent of people take fixed
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  rates, So the fixed rates since October has dropped over a percent. So
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  people should be out there buying right now just because you know the fixed rate
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  is down, and really not really pay attention to what the Bank of Canada
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  is doing. See that's when I think one of the other things that gets
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  so complicated with people is you think that you should be taking your cues from
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  the institutions and the authorities, but that might seem to be counterproactive productive in
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  times. Right, you need to talk to a professional, talk to a
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  mortgage specialists like myself, and have us do the math where you you know,
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  what would it cost me if I did variable in interest over five years
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  or two years? If I took a two year term, what would it
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  cost me? If I took a five year term and I paid extra,
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  how much would that cost me? So these are all things that a qualified
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  mortgage agent that has tenured should be able to rattle off to you very easily.
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  We all have calculators and processes in place that we can but if somebody
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  just says no, no, we think you should take a two year and
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  they don't show you the math question it. So it's like it sounds to
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  me like if you are a lawyer and you decide to defend yourself in a
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  court, you've got a client who's an idiot. If you don't know much
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  about this kind of thing, do not rely on your own wits on it.
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  Pick up the phone, call a specialist. There's a reason why you've
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  got the training in what you do and you're able to break things down to
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  a point where people can actually understand it well exactly, and it's easier.
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  You know, like a lot of people don't want to come out anymore and
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  sit in front of a mortgage agent. They just want to do everything online.
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  Honestly, that that's a mistake for clients. They should want to sit
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  in front of somebody, because once you see the numbers on paper, you
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  see the numbers on computers, you and you have somebody explaining it to you.
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  While you're seeing it, you start understanding if I send a bunch of
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  numbers in an email, you're going to be lost, guaranteed. So sit
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  in front of your person, make it in person meeting, and get their
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  their good advice. Well you've got that good advice. I want to thank
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  you so much for joining us, helping to break this down for people.
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  Yeah, it goes over people's heads. You start to talk about numbers of
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  people in their eyes gloss over. You bring up the Bank of Canada and
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  interest rates come on. They're not able to follow through on their own without
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  some handholding, and that's what you're able to Ron Bondy, mortgage specialist,
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  Thank you so much for your time today. Thanks for having me. You're
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  welcome. Have a great one, folks. We're going to take a quick
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  break right now, and then when we get back, we've got a lot
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  of stuff that we were going to get into. I've got one story that
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  I really want to talk about here regarding D Day events that are taking place
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  and Canadian veterans. So don't go anywhere, John Lydkey here on AM eight hundred