The draw of refinancing comes as discounted fixed-mortgage rates have fallen from around 5.49% last October to rates now being offered at just under four per cent for the most qualified borrowers
Interest rates are dropping, but many Canadians are still feeling the hangover of the highest lending costs in a generation.
The potential savings come as both the Bank of Canada and the U.S. Federal Reserve have started lowering rates for the first time in more than four years now that inflation has subsided. There are many Canadians who have had toturn to credit card debt, as outstanding balances hit $122-billion in the second quarter, according to Equifax, up 13.7 per cent from a year earlier. Balances grew more for those who were also paying a mortgage.
Many fixed-rate mortgages use what’s called an interest rate differential to help determine the cost, which will factor in how far along the mortgage is, and as the name suggests, the difference in interest rates from when the mortgage was first secured and when it’s being refinanced.Refinancing a mortgage will generally also involve legal fees, an appraisal charge, registration charge, and, if switching lenders, a discharge fee.
The current five-year Canadian bond yield, which helps determine fixed mortgage rates, is already pricing in the Bank of Canada cutting to 2.5 per cent from its current 4.25 per cent, noted a report by Beutel Goodman Investment Counsel.
Mortgage Cent Rate Bank Rates Interest Credit Bank Of Canada U.S. Federal Reserve Equifax
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