Borrowers flood Google for best mortgage rates post-rate cuts
Google searches for mortgage-related terms have skyrocketed, reaching their highest point since the pandemic's onset in March 2020, The Financial Post reported.
What makes this surge unusual is the timing. Typically, mortgage searches peak in the spring when home-buying activity is at its highest. But this year, September has seen a flood of Canadians turning to Google for mortgage information, spurred by the recent rate cuts that have made borrowing more affordable.
“Mortgage searches typically peak in March or April as the spring homebuying season kicks off,” mortgage strategist Robert McLister wrote in the report.
Now, with borrowing costs lower, three main groups – renewers, refinancers, and prospective home buyers – are searching online for the best mortgage rates and terms.
Homeowners nearing the end of their fixed-rate mortgage terms are among the most anxious to find better deals.
Many secured ultra-low rates, some as low as 2.49%, five years ago and now face the prospect of renewing at nearly double those rates. Others locked in variable rates that have since climbed past 5.60%, leaving them with significantly higher monthly payments. Some are concluding one-year fixed rates that were 6-7% or more in 2023.
Read next: Variable-rate mortgages make a comeback amid rate cuts
“If you’re among those shopping for a renewal and are well-qualified, start with the lowest nationally advertised mortgage rates from this story’s accompanying table,” McLister advised. “Use them as leverage with your existing lender, and if they don’t play ball — and it’s worth your time and money — leave.”
Another group searching for mortgage options includes those looking to refinance. With Canadian households carrying a record $2.41 trillion in debt, many are hoping to consolidate high-interest debt into their mortgages, which could save them substantial amounts each month.
However, refinancing isn’t always straightforward. Borrowers who took out mortgages during the 2021-2022 housing boom may find themselves with less equity in their homes, making refinancing more difficult. They also face the challenge of the mortgage stress test, which requires them to qualify at higher rates than their contract allows.
Many of these borrowers are looking for ways to manage these hurdles, often leading them to search for non-prime mortgage rates or alternative lending options.
“Unfortunately, many are looking at the wrong rates, thinking they can qualify for the best prime lending offers. In reality, those with high debt-to-income ratios or lower credit scores are often relegated to non-prime rates, which are at least 100 to 200 bps higher than Canada’s leading offers. Non-prime rates also come with lender/broker fees starting around one per cent of the loan amount, which prime lenders don’t charge,” McLister explained.
While the fall months are typically quieter for home sales, a new wave of potential buyers is now scouring the internet for mortgage information. With fixed mortgage rates at their lowest levels in two years, these buyers are eager to take advantage of the lower costs before rates rise again.
Many prospective buyers are watching the market closely, aware that falling rates and record population growth could drive home prices higher.
Bank of Canada Governor Tiff Macklem recently noted that a rebound in home prices is possible as rates decline, further motivating buyers to act quickly before the market heats up.
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