Lower rates are coming—Here’s how homeowners can save thousands

The Problem for Overleveraged Homeowners

• Why this matters now: U.S. tariffs are causing economic uncertainty, and bond yields are dropping—leading to lower fixed mortgage rates in Canada.
• Many homeowners took on large mortgages at peak rates, and now is the time to restructure before financial pressure worsens.
• The Opportunity: Lower rates create a window to restructure debt, reduce payments, and free up cash flow.

Restructuring Strategies to Reduce Mortgage Stress

1. Locking in Lower Fixed Rates from Variable Mortgages

Who should consider this?

• Homeowners with a variable-rate mortgage who want to secure stable payments while rates are dropping.
• Those who want to protect against future rate increases if inflation resurfaces.

How this helps:

• Example: A homeowner with a $500K mortgage at Prime - 0.50% (currently 5.75%) could lock in a new fixed rate at 4.49% for 3 or 5 years.
• Monthly savings: ~$300-$500 per month on mortgage payments.

2. Breaking High Fixed-Rate Mortgages to Refinance at a Lower Rate

Who should consider this?

• Homeowners locked into 5-6%+ fixed-rate mortgages from 2023-2024.
• Those with a long remaining term where a lower rate could offset the penalty cost.

How this helps:

• Breaking a high-rate mortgage can save thousands in interest over time.
• Example: If you have a 5.75% rate with 3 years left, and can refinance at 4.49%, you could save over $15,000 in interest over the remaining term.
• Penalty Consideration: Work with a broker to calculate whether the cost of breaking your mortgage is worth the savings.

3. Blend and Extend: A Middle-Ground Approach

Who should consider this?

• Homeowners stuck in a high fixed rate but not ready to pay penalties to break the term.
• Those who want a rate reduction without refinancing costs.

How this helps:

• Your lender blends your current high rate with today’s lower rates and extends your mortgage term.
• Example: If you have a 5.75% rate, your lender may offer a blended rate of 4.90% for a new 5-year term—saving money without breaking the mortgage.

4. Using Home Equity to Consolidate Debt & Lower Payments

Who should consider this?

• Homeowners who have high-interest debt (credit cards, car loans, personal loans).
• Those who have built significant home equity since buying.

How this helps:

• Instead of paying 18-22% credit card interest, refinance at 4-5% mortgage rates to consolidate debt.
• Example:
  • A homeowner with $40,000 in credit card debt at 20% interest pays ~$800/month in interest alone.
  • By rolling that debt into a $40K mortgage refinance at 5% interest, their payment drops to ~$210/month—saving over $7,000 per year.

Final Thoughts & Action Steps

What Should Homeowners Do Now?

• Assess your mortgage – Check your current rate, term, and penalties.
• Get a rate hold – Secure today’s lower rates before they increase again.
• Explore restructuring options – Whether it’s refinancing, blending, or locking in a fixed rate, homeowners should act before rates shift again.

Need help navigating your mortgage strategy?
Let’s chat about your options.