With house sales in the region way up, it has been a busy year for banks and mortgage brokers.
Moncton Financial Planner John Maisey says at the start of the pandemic, the Bank of Canada lowered interest rates, and that impacted mortgage rates as well.
Maisey says, since then, homeowners have been doing early renewals, with many taking advantage of additional extra home equity, “We’ve seen a great appreciation in the value of real estate so there are some opportunities there to unlock the equity and tidy up some of the other debts we may have by consolidating and improving cash flow.”
He says the average mortgage right now is around $200, 000 in the Moncton area, “If you renewed in the last five years, your rate was probably around 3.5 per cent, and your payment would be around $1000 a month. Current rates now are around 2.29% on a fixed rate to around 1.59% on another. If you go with a fixed rate, you’ll save $125 a month. If you go with a variable rate, you could be saving around $200 a month. If the value of your house went from $200,000 before the pandemic to $300, 000 now, you may be able to access some extra capital. You can keep your payment the same and pay off that credit card bill that has been nagging you or your line of credit. There are definitely opportunities.”
Maisey says if you choose to refinance to take advantage of that home equity, just make sure you take future costs into consideration, “Be prepared for an increase of $100 a month every one per cent the rates go up. Five years from now, if you still have a mortgage and the interest rates are two per cent higher, can you swing that extra couple hundred dollars a month on that extra payment. Many years ago, I’d have people refinancing homes to take a trip to Disney. That’s a really bad choice.”
Maisey says he always believed that the homes in the Moncton region was always undervalued.
He doesn’t expect house prices will return to what they were in the start of 2020.
