Use Low Rates to Your Advantage!

Marci • September 16, 2016

In an article I recently published called “ Is Now a Good Time to Buy? ” we identified that interest rates are at all time Canadian lows and as it’s never been cheaper to borrow money, now is a good time to buy property. In no way was it being said that “because interest rates are low, you should rush out and buy property”. Obviously there is a balance and you should take the decision to buy a property seriously. The point of the article was that while the media would have us believe that the sky is falling and the housing market is crashing around us, it’s not all doom and gloom, there are some silver linings (like low interest rates). 

But the problem with low interest rates is that they can actually perpetuate the housing crash conversation. These low interest rates won’t last forever, inevitably rates will go up. And when they do go up, the question is “are today’s low rates setting people up for failure down the road when rates increase”? Well, let’s have a look and discuss the 5 year fixed rate mortgage. 

Firstly, when qualifying for a mortgage using the 5 year fixed rate, you are able to debt service (qualify) using the contract rate (low rate, currently around 2.39%). This is instead of having to use the benchmark rate (currently 4.74%) like you would on a variable rate mortgage or any term less than 5 years. As such, the low rate on the 5 year fixed allows you to qualify for a much higher mortgage amount compared to qualifying at the higher benchmark rate. The argument is that by qualifying using the lower rate, you are taking on more debt than you can actually handle. 

Secondly, when your 5 year term is up, even after paying on the mortgage for 5 years, if interest rates go up, there is a chance your mortgage payment will go up as well. The media calls this “payment shock” and it’s a real thing. On a modest mortgage amount, with rates as low as they are today, any increase of rate at renewal could mean hundreds of dollars a month extra on your new payment schedule.

Qualifying for a higher mortgage amount based on a low interest contract rate, combined with a higher rate upon renewal, plus a third variable like a job loss, reduced income because of a maternity leave, or significant health/life issue is what leads speculators to make the claim that low interest rates are contributing to the eventual housing market collapse. It’s a reach, but that’s the argument that’s made. 

So, if you find yourself concerned about these things, here is some quick advice on how to avoid payment shock and how to take advantage of today’s low interest rates. 

Just because you qualify for a certain mortgage amount (because of low interest rates or not), doesn’t mean you have to spend that much. If you are worried about a potential market correction, instead of qualifying using the lower mortgage amount, consider setting your personal limit at the benchmark rate instead. That way you are already building in a “stress-test” and are ahead of the game.

Also, just because your minimum payment is based on today’s low interest rate, doesn’t mean you can’t pay more aggressively. Let’s say your payment is set using a 2.39% rate, using your pre-payment privileges, consider increasing your payment to the benchmark rate of 4.74%. This will do two things, it will pay down a lot more of the principal amount in the first 5 years of your mortgage, plus if interest rates do increase upon renewal, you will have already conditioned yourself to be paying a higher payment, and you won’t be shocked by the increase!

If you are thinking about buying a property in the next couple of years, please contact me anytime, I would love to help you arrange mortgage financing. 

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What You Need to Know From the CMHC 2025 Housing Market Outlook

By Marci Deane • June 26, 2025
The Canada Mortgage and Housing Corporation (CMHC) has just dropped their highly anticipated 2025 Housing Market Outlook, and if you’re a homeowner, future buyer, or just like to keep your finger on the real estate pulse, there’s a lot to unpack. Here’s the short version: The Big Picture (Canada-Wide) Mortgage rates are expected to decline in 2025, giving some long-awaited relief to buyers. Home sales and prices are heading back up, though we’re not expecting the wild ride of 2021. Rental markets are softening slightly with more supply coming online. Condo construction is slowing, while purpose-built rental and ground-oriented housing hold strong. CMHC is cautiously optimistic, but they’re also tracking risks like U.S. trade tensions and lower immigration. What About British Columbia? If you’re in BC, especially Greater Vancouver or Vancouver Island, here’s what matters most: Prices are forecast to hit new highs by the end of 2025. Sales are rebounding, thanks to lower mortgage rates and some recent financing policy changes. Tighter inventory will drive demand in townhomes and entry-level properties. Rental markets are finally seeing some relief, with rising vacancy rates and record rental construction underway. Why It Matters This isn’t just “market noise.” For buyers, sellers, renters and industry pros, these trends point to a more balanced housing environment in the next 12–18 months. That means better planning opportunities, less panic-buying, and a slightly calmer market for everyone involved. If you’re making moves in the real estate world, or just want to understand what the data says about where we’re headed, this report is worth a closer look. ➡ Download the full 3-page PDF summary here . Need help making sense of how this impacts your mortgage, buying power, or investment strategy?  Ask Marci About Mortgages. I’m always happy to walk you through it.

Older Canadians Have Mortgage Options

By Marci Deane • June 25, 2025
Although it’s ideal to have your mortgage paid off by the time you retire, that isn’t always possible in today’s economy. The cost of living is considerably higher than it has ever been, and as a result, many Canadians are putting off retirement, hoping to make just a bit more money to add to that nest egg. So if you find yourself in the position where you’re considering your mortgage options into retirement, you’ve come to the right place. The advantage of working with an independent mortgage professional instead of a single bank is choice. When you work with an independent mortgage professional, you won’t be limited to an individual institution’s products; rather, you will have access to considerably more options. Here are some options available to older Canadians as they plan for mortgage financing through their retirement. Standard Mortgage Financing If you’ve got a steady income, decent credit, and equity in your home, there is no reason you shouldn’t qualify for standard mortgage financing, which usually comes at the lowest interest rates and best terms. Some lenders use pension and retirement income to support your mortgage application even if you’ve already retired. Reverse Mortgage Financing A reverse mortgage allows Canadian homeowners 55 years and older to borrow money from their homes with no proof of income, no credit check, and no health questions. A reverse mortgage is a fabulous mortgage solution that has helped thousands of older Canadians enhance their lifestyle. Home Equity Line of Credit (HELOC) A line of credit secured to the equity you have in your home is an excellent tool to allow you to access money when you need it but not pay interest if you don’t need it. Many older Canadians like the idea of rolling all their expenses and income into one account. Private Financing If you happen to be in a bit of a tight spot, you have a plan but need a financial solution; private financing might be the answer. Indeed not the first choice for many because of the higher interest rates. However, private financing can provide you with options where a traditional bank can’t. If you have any questions about securing mortgage financing for your retirement, please connect anytime. It would be a pleasure to work with you and walk you through all your options.

First-Time Homebuyer? A New GST Rebate Could Put Thousands Back in Your Pocket

By Marci Deane • June 20, 2025
If you’re a first-time homebuyer eyeing a new build or major renovation, there's encouraging news that could make homeownership significantly more affordable. The federal government has proposed a new GST rebate aimed at easing the financial burden for Canadians entering the housing market. While still awaiting parliamentary approval, the proposed legislation offers the potential for thousands in savings —and could be a game-changer for buyers trying to break into today’s high-cost housing landscape. What’s Being Proposed? Under the new legislation, eligible first-time homebuyers would receive: A full GST rebate on homes priced up to $1 million A partial GST rebate on homes between $1 million and $1.5 million This could mean up to $50,000 in tax savings on a qualifying home—a major boost for anyone working hard to save for a down payment or meet mortgage qualification requirements. Why This Matters With interest rates still elevated and home prices holding steady in many regions, affordability remains a challenge. This rebate could offer meaningful relief in several ways: Lower Upfront Costs: Removing GST from the purchase price reduces the total amount of money buyers need to save before closing. Smaller Monthly Payments: A lower purchase price leads to a smaller mortgage, which translates to more manageable monthly payments. Improved Mortgage Qualification: With a reduced purchase amount, buyers may find it easier to meet lender criteria. According to recent estimates, a homebuyer purchasing a $1 million new home could see monthly mortgage payments drop by around $240 —money that could go toward savings, home improvements, or simply everyday expenses. Helping Families Help Each Other This proposal also offers a win for parents who are supporting their children in buying a first home. Whether through gifted down payments or co-signing, a lower purchase price and more affordable monthly costs mean that family support can go further—and set first-time buyers up for long-term success. Is This the Right Time to Buy? If you’re thinking about buying a new or substantially renovated home, this proposed rebate could dramatically improve your financial position. Now is the perfect time to explore your options and make sure your mortgage strategy is aligned with potential policy changes. 📞 Let’s connect for a free mortgage review or pre-approval. Whether you’re buying your first home or helping someone else take that first step, I’m here to help you make informed, confident decisions.