If you’re renewing your mortgage over the next six months, chances are high that you will be able to save yourself money by capitalizing on current low interest rates, according to a new report by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
In its fall state of the market report for 2014, CAAMP said that for mortgages that will be renewed in the next half year, the current average interest rate is 3.5%. Out of the 140,000 borrowers who will renew during the next six months, 80,000 are currently paying interest rates of 3.5 per cent or higher. Fixed rate mortgages are now widely available at 3.0 per cent or lower, and variable rate mortgages at 2.6 per cent or lower.
CAAMP said, “Therefore, for most of these borrowers, interest rates should be unchanged or fall when their mortgages are renewed.”
The report added, “For renewals during the second half-year period (spring 2015 to fall 2015), 58 per cent of borrowers have current rates of 3.5 per cent or higher and are expected to benefit at renewal.”
CAAMP goes on to say that subsequent mortgage renewers have a higher chance of seeing their payments rise but adds that survey results show that most mortgage holders have been cautious in the amount of mortgage debt taken on and are prepared for future rate increases.
In terms of down payments for first-time buyers, CAAMP asserted that the “Bank of Mom and Dad” was not as significant as has been widely speculated.
The association reported that although gifts or loans from parents as a source of down payment had risen (17 per cent of total down payment in 2010-2014 compared with 12 per cent in 200-2004) it is still not the major source of capital. For the 2010-2014 period, personal savings made up the highest averate share of total down payment (40 per cent), followed by a loan from a financial institution (27 per cent).
For the full report, click here.
