Why Mortgage Searches Are Surging: What You Need to Know About Renewals, Refinancing, and Buying

Since the pandemic, mortgage-related searches have spiked on Google, becoming a hot topic for those renewing, refinancing, or looking to buy homes. With recent rate cuts from the Bank of Canada, borrowers are now scrambling to understand their options, seeking the best deals before the market shifts again. This post breaks down the key factors contributing to this surge, focusing on renewers, refinancers, and prospective buyers.

Renewers: Facing Higher Rates

Many people who secured mortgages five years ago at much lower fixed or variable rates now find themselves facing significantly higher costs. Renewers are shopping for better deals in a market where rates are almost double what they once were. The key for these borrowers is to use nationally advertised mortgage rates as leverage with their current lender. If their lender doesn’t cooperate, switching may be worth the time and effort to secure a more favorable rate.

Refinancers: Managing Record Household Debt

Canada’s household debt has soared to $2.41 trillion, with many Canadians feeling the pressure to merge high-interest debt into their mortgage. Refinancing offers a way to reduce monthly payments, but borrowers are finding it challenging to qualify. One reason is the strict “stress test” rate, designed to ensure that borrowers can handle higher payments. Refinancers must also contend with penalties if they wish to break their existing mortgage for a new, lower rate.

Prospective Home Buyers: Capitalizing on Falling Rates

With mortgage rates at two-year lows, many potential home buyers are watching the market closely, sensing an opportunity to enter before prices rise again. As fixed mortgage rates fall, combined with population growth and a limited housing supply, the market is poised for a potential uptick in sales. First-time buyers are especially motivated by lower rates, hoping to secure a home before prices rise further.

The Bigger Picture: A Changing Market

Mortgage growth has been slow, but the market is showing signs of recovery. With bond market projections indicating further rate cuts, and Canada’s population continuing to grow, the housing market may see a revival in the coming months. However, as housing demand rises, home prices are likely to follow suit. This makes it crucial for buyers, renewers, and refinancers to stay informed and act when the market offers favorable conditions.