Let’s say you’ve got six months until your mortgage renewal, and suddenly your bank calls with what they’re calling a ‘special rate’ if you renew early. It sounds like an exclusive deal—maybe even a money-saving opportunity. But there’s a catch. They usually give you a tight deadline, often just a few days, to sign the papers or else the offer disappears. The urgency can be convincing, but don’t let it fool you.

This is a classic sales tactic. They know that if you feel like you’re going to lose something, you’re more likely to jump at the chance to grab it. Think about a child with a toy. She might ignore it for hours, but as soon as you try to take it away, she suddenly wants it more than ever. That’s exactly what banks are doing when they present these early renewal offers.

The truth is, they want to lock you in before you start shopping around. They know that during a mortgage transfer, you can hold a rate for up to 120 days. So, they’re hoping to secure your commitment at a higher rate before you have a chance to compare other options.

It’s interesting how this tactic seems to be used more frequently when mortgage rates are on the decline.  If rates are expected to drop, locking you in early at a higher rate benefits the bank, not you. Unfortunately, some homeowners fall for this and sign the early renewal, thinking they’ve scored a deal.

 

Observe the Mortgage Rate Trend 

This is one of the most important things to consider before deciding whether to sign an early renewal offer. If mortgage rates are expected to rise, locking in now could be a good move. However, if rates are likely to drop and your bank is pushing a ‘great deal’ to renew early, then be weary. Banks may have their own agenda, which might not align with your best financial interests.

So, before you rush into an early renewal, take a step back and assess the rate trends. If rates are falling, waiting could save you a significant amount of money in the long run. Make sure to explore all your options before committing to anything the bank offers under pressure. Your financial future deserves careful consideration, not a hasty decision based on a fleeting ‘special offer.’

 

Mortgage Rates Continue to Fall 

Now that the Bank of Canada has reached its inflation goal of 2.00% roughly a year ahead of schedule, chances are strong that rate cuts will come faster than originally expected. 

As I’ve been saying for a while, fixed rates will not fall as fast as the Bank of Canada rate. While it’s possible if not likely that we’ll see a 0.50% rate cut from the Bank of Canada on October 23rd, it does not mean that fixed rates will also drop by 0.50%. Or at all. This doesn’t mean that fixed rates won’t drop further. They will. Just not quite as fast as what can be expected from the Bank of Canada. The lowest fixed rate for an insured mortgage is currently sitting at 4.09% with the lowest variable rate at prime -1.25% (currently 5.20%). 

 

Final Thoughts 

Always take the time to check with a seasoned mortgage professional before signing a mortgage renewal with your bank. Before making any decision on your mortgage actually. Just remember that not all mortgage professionals are created equal. Always take the time to ask questions about how long they have been working in the field and try to get an idea of their track record. 

In my Amazon #1 best selling book, Beat the Bank – How to Win the Mortgage Game in Canada, I have an entire chapter dedicated to choosing the right person to handle your mortgage for you. Not to mention, strategies on how to position your mortgage for maximum savings over your term. It’s great to have the lowest mortgage rate on the market, but there are many ways to save on your mortgage over and above the rate itself.