Renewing your mortgage? Here's what brokers in Regina and across Canada recommend

CTV National News: Fixed rate or variable? Canadians carrying a mortgage will likely be paying special attention to Wednesday morning's interest rate decision from the Bank of Canada.

More than two million Canadians will renew their mortgages over the next year-and-a-half. CTV News asked more than 50 mortgage brokers across Canada how to get the best mortgage deal. This is what we found.

Those paying off a mortgage in Regina surely know the pain of increasing interest rates – with the Queen City ranking high above the national average in several metrics.

According to the Canada Mortgage and Housing Corporation (CMHC), more than two million mortgages will be up for renewal in 2025 and 2026. This is equal to 44 per cent of all mortgages in Canada and follows one million renewals in 2023.

The COVID-19 pandemic saw a rapid decrease in interest rates. The Bank of Canada held its policy interest rate at 0.25 per cent from April of 2020 to March of 2022. Conventional mortgage lending rates for a five year term hit a low of 3.2 per cent during that period.

At the same time, the pandemic saw countless people across Canada enter the housing market. The increased activity has now led to low housing inventory and rising prices as a result.

On top of this, interest rates have more than doubled. The Bank of Canada’s policy rate has reached five per cent, while the conventional lending rate has risen to over 6 per cent.

According to Tania Bourassa-Ochoa, Deputy Chief Economist for CMHC, Canadian homeowners’ first choice has always been fixed rate mortgages with longer terms – but that has recently changed.

“Historically speaking, Canadians have always opted in majority for a five year fixed terms. So it's always been like the most popular choice,” she told CTV News.

“When we're looking at … two, three years ago, when interest rates were super, super low. We actually saw there was quite a big discount on variable rates and a lot of mortgage consumers actually chose the variable option.”

Payments, delinquencies up in YQR

The steep rise in rates since 2022 has directly led to an increase of nearly $1,000 to the average monthly payment on new mortgages in Regina – increasing from $1,385 in Q1 of 2022 to $2,371 in Q4 of 2023.

In the most recent available data, Regina’s average has supplanted the national average by more than $200.

With the increased monthly payments, unsurprisingly, mortgage delinquency rates are up.

However, the current rate of 0.52 per cent is nowhere near the all-time high of 0.72 per cent in April of 2020.

Continuing the trend, Regina’s delinquency rate is three times higher than the national average at 0.17 per cent.

State of housing market

In its latest available monthly report for April, the Saskatchewan Realtors Association (SRA) reported over 1,600 sales across the province – in addition to inventory levels 40 per cent below long-term, 10-year trends.

“Economic growth, employment gains, and record population numbers continue to support strong housing demand in Saskatchewan, resulting in a tenth consecutive month of above-average sales in April,” SRA CEO Chris Guérette said in the report. “These factors are, without question, boosting housing demand – as evidenced through rising sales in the resale market and falling vacancy rates in the rental market.”

The City of Regina was one region highlighted for an uptick in sales. A total of 424 were sold in the city in April, representing an increase of more than 50 per cent year-over-year and 52 per cent over long-term trends.

On top of ever-increasing sales, housing inventory remains low. Even though a slight increase in listings was reported in April – it was unable to make any significant inventory relief.

Overall, Regina reported a 30 per cent year-over-year decline in inventory, with levels over 46 per cent below long-term 10 year trends.

In April, the benchmark price in the Queen City was reported to be $319,800 – up from 313,100 in March and $311,500 from the same time last year.

Responses to CTV News' Mortgage Broker Questionnaire

CTV News had 59 mortgage brokers from across Canada respond to a questionnaire to gain their insight into what type of mortgage homeowners should be looking at.

Broker Name: Skott Enns

Broker Company: The Mortgage Group (TMG)

Note: All questions are based on a typical Canadian household renewing a mortgage.

Question #1:  What is the best type of mortgage to have right now?

Enns recommends that a three year fixed rate mortgage is the safest option in the current financial climate.

Question #2:  What is the best rate you can get right now?  (Specify rate and term length)

In terms of interest rates, the best possible rate for three year fixed mortgage is 5.09 per cent. This drops to 4.79 per cent for a five year term.

As for variable, Enns says homeowners would be lucky to get 6.15 per cent.

Question #3: Should I get out of my variable mortgage if I have one?

Despite the expensive prospect of staying in a variable rate mortgage – Enns advises residents to “ride it out” and to not break their agreement if they can afford the monthly payments.

Question #4: Should I opt for a longer amortization period?

Enns recommends that homeowners don’t opt for a longer amortization period if they don’t need it.

Question #5: Can I trust a bank for mortgage renewal advice?

Out of an abundance of caution and due diligence, Enns recommends homeowners always get a second opinion.

Question #6: What piece of advice would you pass on to anyone looking to renew their mortgage?

“Before signing on the dotted line with your existing lender, always call a broker to get a second opinion,” Enns said.

“It is entirely possible the existing lender ends up being the right choice, but most of the time we are able to save you money.”

Enns ranks in the majority for most of his answers. A total of 59 per cent of brokers said fixed rate mortgages were the best option.

The lowest fixed rate that was reported was 4.34 per cent – while the lowest variable was 5.9 per cent.

Forty nine per cent of brokers said homeowners should not get out of variable if they are already in one.

Fifty seven per cent of brokers said homeowners should seek long amortization rates while only eight per cent said no. The remaining 35 per cent said the choice depends on each homeowner’s unique situation.

Just over 50 per cent of brokers said homeowners should not solely trust a bank for advice. Twenty nine per cent voted yes while the remaining 20 per cent said it depends.

The Bank of Canada is set to provide an update on its policy rate on Wednesday, June 5.

The announcement is one of eight scheduled dates each and every year.