Low Mortgage Rates

What Record-Low Mortgage Rates Mean for Buyers

BUYING A HOME?

If you’re looking to purchase a home, today’s record low mortgage rates are a huge boon, enabling buyers to qualify for larger mortgages or enjoy lower payments than even a year ago.

Interest rates on a  5 year fixed mortgage have declined from around 2.8% last year to as little as 1.7% (or, sometimes even a little less!) for buyers with excellent credit.   To put those numbers in context, consider:   a $500,000 mortgage would have required payments of around $2,315 per month at 2.8%, declining to $2,046 per month at 1.7%.   That is a very significant saving, and also allows you to qualify to buy a substantially more expensive home, if you wish!   Use our mortgage calculator to see what your savings might be:   BCHB mortgage calculator.

These savings may help you to understand the massive surge in home buyers, rushing to buy even during the pandemic.   The combination of cheaper mortgages, pent-up demand and a fear of missing out all contribute to a feeling of urgency amongst would-be buyers.

For those who are already settled into a mortgage, breaking your current term or changing mortgage providers completely for a lower rate may be a tempting proposition.

It may be worth having a conversation with your mortgage broker or bank to determine if a switch is right for you. Your mortgage professional can use calculate the penalties incurred by breaking your current mortgage agreement to determine whether switching will be worth it in the long term, as well as provide information on your up-to-date mortgage balance.

There are a few key elements to consider when exploring the idea of leaving your mortgage term for a lower rate. Breaking your mortgage always comes with a penalty. If the penalty is significant, you’ll want to make sure you have money set aside to pay that fee, as it’s not always factored into the new mortgage.

If you’re looking to swap lenders or renew early, it will also be necessary to re-qualify for a mortgage.   The process  will examine your credit, income and employment. If you decided to defer your mortgage payments because of COVID-19, your credit history should not be affected but lenders typically want to see the mortgage payments restarted  prior to granting a new mortgage.

Check our other blogs under Market Trends – that might give you answers about buying or selling a home.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.