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Decoding Mortgage Rates: What They Truly Mean for You With Lynn Kelly - Agent Tech Mastery Podcast

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For mortgage advice: [email protected], 778-839-9363

Discuss recent Bank of Canada interest rate changes and their impact on mortgages, with insights from mortgage broker Lynn Kelly.

Key Takeaways

  • Bank of Canada rate cuts only directly affect variable rate mortgages, not fixed-rate mortgages
Fixed mortgage rates are based on bond yields, not the Bank of Canada rate
Pre-approval and understanding true affordability is critical before house hunting
Appraisals play a crucial role in determining how much a lender will finance

Topics

Bank of Canada Rate Cut Impact

  • Bank of Canada rate dropped from 4.25% to 3.75%
Banks' prime rate decreased from 6.45% to 5.95% as a result
Only affects variable rate mortgages, not fixed-rate mortgages
For every $100,000 of mortgage on a 25-year amortization, borrowers save about $30/month

Fixed vs Variable Rate Mortgages

  • Fixed rates currently around 4.2-4.4% for 3-year terms
  • Variable rates now around 5.45% (prime 5.95% minus ~0.5% discount)
  • Historically, variable rates tend to outperform fixed rates over time
  • Fixed rates offer payment stability, while variables can fluctuate
  • Variable rates easier to break (3-month interest penalty) vs fixed (interest rate differential)

    • Mortgage Pre-approval and House Hunting

    • Critical to get pre-approved before house hunting
  • Pre-approval should involve detailed discussion (1+ hour) about finances, not just a quick check
  • Buyers should not exceed pre-approved amount, even in competitive situations
  • Appraisals determine maximum financing, regardless of purchase price
  • Buyers may need to cover shortfall if appraisal comes in lower than purchase price

    • Appraisal Process

    • Lenders finance the lesser of purchase price or appraised value
  • Appraisers use recent comparable sales to determine market value
  • Adjustments made for property differences (e.g., single vs double garage)
  • Banks have lists of approved appraisers; brokers choose from that list

    • Next Steps

    • Potential homebuyers should seek thorough pre-approval before house hunting
  • Work with reputable agents and mortgage professionals who prioritize education and client protection

    • Be cautious of overbidding in competitive situations, considering appraisal risks

    Consider speaking with Lynn Kelly for mortgage advice: [email protected], 778-839-9363

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    Agent Tech MasteryBy darci4