Renewing your mortgage? Planning is key amid polarizing challenges, say Vancouver Island brokers

More than two million Canadians will renew their mortgages over the next year-and-a-half. CTV News asked more than 50 mortgage brokers across Canada how to get the best mortgage deal. This is what we found.

Mortgage brokers on Vancouver Island say many clients going through renewals are feeling stressed by their future financial picture. And some think planning is key in a polarizing housing market where the Bank of Canada rate brings trickle down effects.

“When everything is as tight as it is, when the housing market is so crunched: Any changes in the interest rates is going to impact everybody. It’s not just people that currently own a home or (are) trying to get into the market,” says Together Against Poverty Society’s executive director Douglas King

In a pricey market where some property owners invest in single family homes with a rental suite, the non-profit says it’s seen a lot of pressure on tenants for rent increases to help pay for the increased cost of owning.

The Bank of Canada rate has steadily increased from one per cent in April 2022 to five per cent in April 2024. The next rate announcement is Wednesday, June 5.

“Right now it’s kind of sheer panic,” says Nowik Mortgage Team co-owner and broker Greg Nowik. “People are thinking their payments are going to go through the roof.”

The central Island broker has 35 years of experience in the industry – and believes it’s imperative clients review their entire financial picture before deciding on the best financing option for them.

“Interest rates on credit cards and car loans are fairly high too, so now is the time to take a look at the flexibility of your product and say what should I do right now,” says Nowik. “What’s the best utilization of my cash flow?”

CTV News polled 59 brokers across the country, asking for their input on the best type of mortgage to have right now. More than half, or 59 per cent, of respondents recommend a fixed rate mortgage; seven per cent selected variable and 34 per cent say it depends.

“The skills that families have had to learn to survive will go with them into the future. That’s the only positive I can think. And I know it’s very hard,” says former homeowner, Alvina Tyler.

According to Canada Mortgage and Housing Corporation, more than two million mortgages are coming up for renewal in 2024 and 2025. Mortgage delinquency rates data from CMHC has slowly ebbed upward to a national average of 0.17 per cent in the last quarter of 2023 – although tracking for the metropolitan areas show Victoria bucks the trend.

It shares the lowest rate of 0.08 per cent in the country with Sherbrooke, Quebec.

“I think that’s largely explained by the various demographic and economic factors that are unique to Victoria compared to Vancouver and Toronto,” says CMHC economist Michael Mak.

Mak says the job landscape is one factor. “A much larger proportion of employment in Victoria is public administration, so basically your various government employment, which is generally very stable. People employed in those sectors aren’t really subject to too much job loss chances.”

The region’s older population is another – as they tend to have less left to pay on a mortgage and more equity.

“It’s just as sensible to rent right now,” says Bruce Switzer. He’s recently moved to Victoria from Tucson, Arizona – and has been surprised by the Island market’s affordability for comparable properties after selling his acreage with a pool in the U.S.

“We watch, and if there was some real terrific deal came along, we’d probably jump on it,” he says.

TAPS says younger generations, especially people under 30, don’t have the option to own so there’s a need to ensure rental options are maintained.

“We would actually love to see some programs that support landlords, that actually help them through these changes if their costs have increased to make it so that they can stay landlords,” says King. “But to get those they should have to disclose their revenue and their income just like tenants and show that they deserve them.”