Canada has officially been declared in recession, and we’re seeing some of the lowest mortgage interest rates in history. This brings up a few concerns and questions from mortgage consumers, whether they be first time home buyers or current homeowners.
One major concern is that with the interest rates so low, a mortgage borrower won’t be able to qualify to keep their mortgage upon renewal at the end of their mortgage term. While this can be a valid problem, there are ways to avoid this happening, such as qualifying the borrower on a higher interest rate, or placing you in 25-year amortization initially so they have the option of extending amortization if qualification at a higher rate down the road is a problem.
Another concern of borrowers is that interest rates are going to rise significantly like they did in the 1980s. While it’s always a possibility, it’s highly unlikely that this will happen, since the Bank of Canada learned its lesson from the last time we saw an economic downturn like this.
Finally, a lot of current homeowners are wondering if it’s worth paying a penalty for breaking their current mortgage to take advantage of the current low mortgage rates. Unfortunately, there isn’t one straight yes or no answer without knowing all the details of each person’s particular situation. However, if you contact First Foundation, we can definitely work through those details with you, and let you know if switching your mortgage at this point will benefit you.
Although the economy is unstable right now, the mortgage industry is still balanced, and generally speaking there are solutions to most economy-related mortgage problems. If you have any questions or concerns that weren’t addressed here, please feel free to contact First Foundation and speak to one of our Licensed Mortgage Brokers.