Another group searching for mortgage options includes those looking to refinance. With Canadian households carrying a record $2.41 trillion in debt, many are hoping to consolidate high-interest debt into their mortgages, which could save them substantial amounts each month.
However, refinancing isn’t always straightforward. Borrowers who took out mortgages during the 2021-2022 housing boom may find themselves with less equity in their homes, making refinancing more difficult. They also face the challenge of the mortgage stress test, which requires them to qualify at higher rates than their contract allows.
Many of these borrowers are looking for ways to manage these hurdles, often leading them to search for non-prime mortgage rates or alternative lending options.
“Unfortunately, many are looking at the wrong rates, thinking they can qualify for the best prime lending offers. In reality, those with high debt-to-income ratios or lower credit scores are often relegated to non-prime rates, which are at least 100 to 200 bps higher than Canada’s leading offers. Non-prime rates also come with lender/broker fees starting around one per cent of the loan amount, which prime lenders don’t charge,” McLister explained.
While the fall months are typically quieter for home sales, a new wave of potential buyers is now scouring the internet for mortgage information. With fixed mortgage rates at their lowest levels in two years, these buyers are eager to take advantage of the lower costs before rates rise again.