It’s very hard to escape the fact that mortgage rates are still at a high in comparison to the last ten years. This has definitely raised a challenge for First Time Home Buyers trying to enter the market. Something less talked about though, is the challenge for those whose mortgage is up for renewal. According to a recent report from BMO approximately $331 billion dollars worth of mortgages are up for renewal in 2024 with an even higher amount of $352 billion worth of mortgages in 2025 set to renew.
The reality is nobody is renewing into lower mortgage rates. There will be sticker shock. Most borrowers can expect their mortgage rate to increase by twenty percent or more.
So what can be done in order to alleviate the upcoming pain for ten’s of thousands of families?
- Negotiate with your lender and shop around. The good news is that lenders are competing more than ever and some lenders are even reported to be offering rates at a loss in order to capture market share. But most people are unaware that since most people just sign their renewal offer without checking, their current lender does not lead with their best rate. When renewing your mortgage it is best to shop around and see what others are offering.
- Extend your amortization. It’s true that even with negotiating a lower mortgage rate upon renewal, this will not drop your mortgage payment dramatically. One way to really effect your mortgage payment is to extend the total length of your mortgage back out to say 25 or 30 years. This may feel like going backwards to some, but keep in mind once you get comfortable with the new mortgage payments, most lenders allow you to pay down your mortgage faster with prepayment privileges. So this option helps you take control of your financing.
Of course, I am available to offer personalized advice for your specific scenario, so don’t hesitate to reach out to me for assistance.