News Articles

Good time to re-mortgage for those who can

Stricter guidelines, but good deals now available for some

By Paul Delean, Canwest News ServiceMarch 8, 2009

Six months ago, before the credit crunch bit and risk became a cutting four-letter word, obtaining or

renegotiating a mortgage was pretty much a formality.

It's harder now. Financial institutions haven't necessarily changed their lending criteria for mortgages, but

they do apply them more strictly. "Grey-area" borrowers who would have received the benefit of the

doubt a year or two ago might need to apply several places now before finding a taker.

The doors are still wide open, though, for clients with steady income, significant assets and/or a solid

credit history. They are, in fact, the object of keen competition between lenders, and as such are in an

excellent bargaining position in what is normally the biggest month of the year for mortgage transactions.

With interest rates near historic lows, housing prices plateauing, and both provincial and federal

governments offering tax incentives for renovation and higher RRSP withdrawals for home purchases

(now a maximum of $25,000 per person), a compelling case can be made for buying, or converting

existing home equity into cash now.

That's provided you feel secure enough about your own situation, the overall economy and resiliency of

the real-estate market to take the plunge.

Apparently, many people still do. In RBC's annual home-ownership survey, conducted in January and

made public this week, 22% of Quebec respondents said they intend to purchase a home over the next two

years, up from 21% in 2008 and 19% in 2007.

Though the housing market has cooled in recent months as consumer confidence waned, there's been a

noticeable surge in refinancing because of the low rates. Christine Lemieux, assistant vice-president of

sales at Multi-Prets, said it started in October and has become more pronounced in 2009.

With low rates expected to linger through the end of the year, "we expect this trend to continue for at least

six more months," CIBC World Markets senior economist Benjamin Tal commented this week.

Even with penalties (typically about three months' interest), it can make sense to switch lenders or

refinance mortgages at the lower rates, Lemieux said. It all depends on the specific terms of your

mortgage agreement.

More than half of Multi-Prets' clients still opt for a five-year fixed term because they'd rather get it over

with, have peace of mind and not preoccupy themselves with interest-rate fluctuations, Lemieux said. "It's

a question of risk tolerance. They have to be able to sleep at night."