For many Canadians, 2023 was a tough year thanks to high inflation and interest rates, and we’re ready to put it far behind us with the hope of a brighter year ahead.
The good news is that economists are suggesting borrowing costs may have already peaked. After three holds in a row, the Bank of Canada (BoC) appears to be at the end of its hiking cycle.
BoC Governor Tiff Macklem said in a recent interview that he expects to start cutting interest rates in 2024, but needs to first see several months of sustained downward momentum in core inflation.
While there is no crystal ball to predict exactly when rates will fall – and by how much – it’s always wise to plan ahead and ensure your finances are on track.
Is your mortgage up for renewal in 2024?
Your current lender will likely offer you an early mortgage renewal option. As always, don’t just sign and return your lender’s renewal offer. Rates are expected to come down, so let’s save you as much money as possible. Chances are, your lender won’t offer you the best rate upfront.
Speak to your mortgage agent well in advance of your mortgage maturity date. They’ll be able to lock in a rate 90-120 days before your current mortgage term ends. If rates drop during that time, your rate will also drop.
Have you considered a refinance?
Refinancing your mortgage and freeing up some money to pay off unsecured high-interest debt on your credit cards, credit lines and/or loans, can be lifechanging. Using home equity to pay off debt will help keep more money in your bank account each month that you’d otherwise lose in interest payments.
With access to more money, you’ll not only be better able to manage your current debt load, but you can also think ahead by earmarking funds to make some home improvements, pay for your children’s education or put toward investments.
Refinancing at renewal time can be especially effective since you won’t have to pay a penalty to break your current mortgage. But, even if you still have some of your term remaining, a refinance may be more economical than the carrying costs associated with unsecured debt. Your mortgage agent will crunch the numbers and review your options to ensure that a refinance is right for you.
Have questions about improving your financial situation to ease your debt load moving forward? Answers are a call or email away!