I wanted to share some important insights about what's happening in the Greater Toronto Area housing market that could significantly impact your financial decisions. The GTA is currently experiencing unprecedented housing market stress, with average home prices falling to February 2021 levels and a concerning surge in distressed sales – 3% of Toronto homes are now power of sale listings, while non-performing mortgages have jumped seven-fold from 0.06% to 0.42% in just a few years. What this means for you is that homeowners who purchased in the past four years lack the equity cushion previous generations enjoyed, making refinancing challenging, and with two-thirds of mortgage holders facing higher payments at renewal, we're likely to see continued downward pressure on prices. Whether you're considering buying, selling, or renewing your mortgage, now is the crucial time to have a strategic conversation about protecting your financial position in this evolving market.
What Just Happened
On September 17th, the Bank of Canada lowered its key interest rate by 0.25% to 2.5%. While this sounds like great news for everyone, the reality is a bit more nuanced – and I'd love to help you understand what it means for you personally.
How This Affects You Right Now
If you currently have a variable-rate mortgage: You're in luck! Your payments have already decreased, and you should see the savings in your next statement.
If you have a fixed-rate mortgage: This rate cut won't impact your current payments, but it will make a difference when it's time to renew – which brings me to something important we should discuss.
The Big Picture You Should Know About
Here's something that might surprise you: 60% of all Canadian mortgages will be coming up for renewal in 2025 and 2026. That's a lot of families who will be making important financial decisions soon.
The encouraging news: Thanks to recent rate cuts, renewal rates are sitting around 5.25% instead of the 5.50% we were seeing earlier this year.
The reality we need to prepare for: About 60% of homeowners renewing will still see their payments increase from what they're paying now.
Why is this happening? Many families secured fantastic rates between 1.7% and 2.5% during 2020-2021. Even with the recent cuts, current market rates are higher than those historic lows.
Let's Make a Plan Together
I believe in being proactive rather than reactive, so here's what I recommend:
If your renewal is coming up in the next 12 months:
Let's review your current situation together
I'll help you explore all your options – not just with your current lender
We can discuss whether now might be a good time to consider debt consolidation if you have other high-interest debts
Here's a real example to consider: For a typical $500,000 mortgage:
Previous payment at 1.7%: approximately $2,100/month
Renewed payment at 3.94%: approximately $2,600/month
That's an increase of about $500/month
I know that sounds daunting, but here's the thing – with proper planning and the right strategy, we can often find ways to minimize this impact or even help you save money overall.
Your Next Step
The key is not to wait until you receive your renewal notice. By being proactive, we can explore more options and potentially secure better terms.
The next Bank of Canada announcement is scheduled for October 29th, and I'll be watching closely to see how this might affect rates further.
I'm here to help. Whether you're facing a renewal, considering debt consolidation, or just want to understand your options better, I'd be happy to have a conversation with you.
P.S. The mortgage landscape can feel overwhelming, but you don't have to figure it out alone. I'm here to guide you through every step of the process.
Don't let renewal deadlines force you into bad rates.
This month we saved clients an average of $380/month on renewals and helped 15 families consolidate debt at under 4%. The October 29th rate announcement is coming – let's position you ahead of it.
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