Preparation and timing are the key to refinancing

Bryan Dudley & James Paleologos, Apartment Financing Specialists, Realtech Capital Group Inc.

In the four calendar years since the fall of 2008, the average annual 5-year GoC bond yield fluctuation has been ~125 basis points from high to low (as illustrated in the graph below). These dramatic variances in bond yields have enticed many savvy borrowers to pre-qualify for refinancing or mortgage renewals in an attempt to forward fix their interest rates during one of these downward swings.

Depending on their objectives, apartment owners can begin their refinancing/renewal process up to 1 year in advance of their current mortgage maturity. Some examples have included early prepayment of mortgages to capitalize on current low rates, blending and extending existing financing, hedging interest rates months in advance of upcoming renewal/funding dates, and refinancing with CMHC to achieve the lowest interest rates in the market. In all of these cases, the key is to start the refinancing process early so that borrowers can be pre-approved and poised to capitalize on low interest rates should a favourable swing occur before their funding date. Securing a lower interest rate dramatically improves cashflow, and can mean a difference of tens, even hundreds of thousands of dollars over the term of a mortgage.

Current rates for CMHC-insured apartment mortgages are ~2.05% for five years and ~2.70% for 10 years. Conventional rates start 100 basis points above CMHC, but are often even higher due to the floor rates which many lenders have been implementing lately.

For further information, or to discuss your options for upcoming refinancing or mortgage renewals, please contact:

Bryan Dudley


James Paleologos