MORTGAGE: Refinancing home loans

Real estate sales may be below last year's levels, but rock-bottom mortgage rates have kept mortgage brokers just as busy as they were in 2008, with clients racing to refinance their home loans.

"[Refinancing] is a huge component of what we're doing," Joe Santos, incoming president of the B.C. Mortgage Brokers Association, said in an interview. He said he thinks it's the same for other lenders.

Santos added that with brokers able to lock borrowers into five-year mortgages with discounted interest rates below four per cent, it becomes attractive for some clients to pay the penalties for breaking out of existing mortgages to chase the lower rates.

Santos said that at his own firm, about 70 per cent of business is in refinancing or renewing existing mortgages and about 30 per cent is devoted to securing new mortgages for buyers to purchase homes.

"By the end of April, we'll be at the same or slightly higher mortgage volume than we did last year," he said.

For some borrowers, Santos said, the lower mortgage rates mean lower payments, and more cash to pay down other debt or invest. He said the best advice is for borrowers to sit down with their bank or mortgage broker to do the math to figure out if refinancing will work for them.

The Bank of Canada drove some mortgage rates down further Tuesday by reducing its key overnight lending rate a quarter of a percentage point to 0.25 per cent, a record and the lowest rate the bank can set.

That spurred Canada's major banks to drop their prime lending rates, to which variable-rate mortgages are tied, also by a quarter point.

The Canadian Association of Accredited Mortgage Professionals reported results Wednesday from its semi-annual mortgage-market survey, which showed that:

- 64 per cent of British Columbians reported they believe now is a good time to buy a home, the highest such rate in Canada and an increase over the fall 2008 survey.

- 37 per cent of British Columbians reported believing that home prices will continue to fall over the next year, a decrease from the fall 2008 survey.

("Borrowers enticed to break old loan contracts" prepared by Derrick Penner/Vancouver Sun)