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2023 was a bad year for mortgage renewals. 2024 and 2025 will be worse.

If you experienced a mortgage renewal from a 5-year fixed rate mortgage in 2023 you would have experienced about a 20% monthly increase in payments. This may have resulted in some pain; a tightening of the belt, an increase in consumer debt or even selling the property in a worst-case scenario. You were subject to the previous mortgage qualifying “stress test” so most people were ok and not defaulting on their mortgages.

2024 and 2025 becomes more interesting. While the December 6, 2023, Bank of Canada rate announcement holds promise and we expect interest rates to begin a decline in 2024, the starting point for mortgages back in 2019 and 2020 was much lower. For example, I have a client coming off of a 1.59% 5-year fixed rate mortgage from 2020 that will renew in 2025. We can expect monthly payments to be 30%, 40%, possibly higher upon renewal in 2024 and 2025.

You have only three possible remedies to your problem, so I encourage you to begin thinking about a plan. Do you need to find another $500 per month. Is it $1000 per month?

1. Increase your income.
Can you pick up another shift at work or add another client? Is there an opportunity for a side job? Do you have an unused room in your house? Time to get creative with your thinking.

2. Decrease your expenses.
I encourage everyone to prepare a budget, so you have a good understanding of how you spend your money. What changes need to occur? Start now so you get into the habit of your new spending. Saving some extra funds in advance of your renewal might prove to be a wise strategy. Cutting expenses is generally easier than increasing income, so please give this serious consideration.

3. Work some “mortgage magic”.
We might have some tricks to help you ease the pain at renewal time, such as extending amortizations, making a bulk mortgage payment, switching lenders, consolidating consumer debt, etc. Clients have already been reaching out to obtain a head start on their renewals and you should as well. It costs you nothing for us to do a full review of your situation and provide some unbiased advice.

We are here to help you. If you have questions reach out. Wishing everyone a happy holiday and a prosperous new year.