Albertans coming out of winter often look like people who have been recently held hostage in a deep freezer for months on end. But thankfully this starts to wear off at the weather warms up. Numb looks of resignation disappear and are replaced with expressions of brightness and hope. A refreshed enthusiasm for life returns! Albertans can be found starting on their spring cleaning, soaking up the sun, and finding new reasons to spend their money.
According to new ratehub.ca data the spring/summer season may be the best one to take on a mortgage. Ratehub examined data from the past 3 years and found that there was a consistent drop in the best five year rate average during between the months of April and July each year outside of the regular fluctuation of rates.
We see this same type of behaviour from all sorts of retailers in the springtime. Spring clothing sales, spring vehicle pricing, spring furniture events. Mortgage lenders like to get in on the spending frenzy too!
President of CanWise Financial, James Laird said, “Lenders and mortgage providers come out with their strongest promotions during the busy spring and summer home-buying season. Regardless of the interest rate environment, springtime is when lenders are willing to make the smallest margins in order to win business.”
Laird went on to say, “Lenders also come out with special promotion offers to incentivize borrowers to lock in a rate. Consumers can expect to see cash-back deals to help with closing costs and refinance fees.” This kind of incentive is often a selling point for existing mortgage owners who aren’t yet at renewal.
According to the ratehub data both the variable and fixed rates took a cut in the spring/summer season of 2016. Between the months of January and March the best five year fixed rate average was 2.37% and the best five year variable rate average was 2.06%. But between the months of April and July these rates dropped respectively to 2.33% and 1.97%.
A similar drop was seen in 2017 when the best five year fixed rate average dropped from 2.3% to 2.25%. The best five year variable rate average dropped from 1.8% to 1.69%.
Yet again in 2018 we saw lower rates in the spring/summer, even though there had been a rising rate environment the rest of the year. The fixed rate average dipped 3.2% to 3.04% and the variable rate dropped from 2.2% to 1.86%.
Laird said that mortgage lenders are highly motivated to get in on competitive spring sales. “[Lenders] do so in order to hit their annual mortgage volume targets… In most cases, lenders will hit their targets during Q2 (April to June) and, as a result, tend to be less competitive with promotions during the latter half of the year.”
If you won’t be able to take advantage of spring mortgage sales you probably won’t have to wait an entire year before you see another sale. During the month of October lenders are likely to drop prices again. “All of Canada’s major domestic private banks end their fiscal year on October 31,” Laird said. “Lenders who want to get an early start on their targets for the next year will come out with their promotions during this time period.”
As with any time of year, when you decide to start shopping for a mortgage make sure you’re getting the best deal out there. The best way to find out what the best deals are and where to find them is to talk to your Trusted Mortgage Broker. To get started today give us a call!