Canadians easing into spring often look like they’ve finally escaped from being held hostage inside a deep freezer for months on end. Once they begin to thaw you’ll notice a look of guarded optimism grace their faces. And when they know for certain that winter is really over (at least until next year) an enthusiasm for the future takes them over with a sort of reckless abandon.
In the spring many Albertans can be found making plans for the summer, warming their skin in the rays of the sun, starting up their spring cleaning, or buying a new home. According to new data from ratehub.ca the spring/summer season may be the best time of year to take on a mortgage.
Ratehub examined the best fixed and variable rate mortgages from 2016, 2017 and 2018 and found that regardless of fluctuating rates throughout the year, between the months of April and July there was a marked drop in the best rates.
The spring shopping phenomenon is not a new concept. One stroll through the mall in springtime will show you how many vendors are willing to drop prices in order to take advantage of the increased willingness to buy. Mortgage lenders get in on this band wagon as well.
“Lenders and mortgage providers come out with their strongest promotions during the busy spring and summer home-buying season,” James Laird, president of CanWise Financial, said. “Regardless of the interest rate environment, springtime is when lenders are willing to make the smallest margins in order to win business.”
Laird continued, “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.” If you already have a mortgage and want to take advantage of a good deal but your mortgage isn’t coming up on renewal, this kind of incentive is just the sort of thing to ease the transition.
In 2016, according to the ratehub data, the fixed and variable rates went down in the spring/summer season. At the start of the year the best five year fixed rate average was 2.37% and the best five year variable rate average was 2.06%. But between April and July these rates dropped to 2.33% and 1.97% respectively.
The same trend appeared again in 2017 when the fixed rate average dropped from 2.3% to 2.25% and the variable rate average dropped from 1.8% to 1.69%.
In 2018 we saw a continually rising rate environment, but yet again in the spring the rates took a dip. The fixed rate went from 3.2% to 3.04% and the variable rate dropped from 2.2% to 1.86%.
Laird explained that lenders are motivated to compete in 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 taking advantage of spring pricing isn’t good timing for you chances are you won’t have to wait a whole year to see a drop in prices again. Lenders often like to drop prices again for the month of October. “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.”
When it comes time to take on your first mortgage channel your inner shopper and find the greatest deal. The best way to do this is to contact Your Trusted Mortgage Broker who will be able to tell you what all the very best rates are and where to find them. To get started contact us today!