Three questions with mortgage expert Angela Calla

Record low mortgage rates have played a significant role in driving housing market activity during the COVID-19 pandemic.

With inflation on the rise and the pandemic hopefully nearing a conclusion, mortgage rates have begun to increase.

To better understand what these changes will mean, we reached out to Mortgage Broker, Angela Calla. She’s an award-winning mortgage expert with 18 years of experience. She also hosted The Mortgage Show on CKNW and authored The Mortgage Code, a best-seller on Amazon. 

Interest rates have just gone up – do you see more increases coming this year?

Yes, we're expecting increases. However, there’s no reason to panic if you properly plan for the eventual rise. Managing your mortgage to ensure no future payment shock and reviewing your debts outside your mortgage to include them to utilize the equity in your home will help your financial house with rising inflation and interest rates.

I’m still a variable rate mortgage holder myself, as the spread of approximately 1 per cent between the rates ensures that money goes to my principal in a mortgage instead of guaranteed interest. 

With uncertainty around the globe, rates will continue to rise but I don’t believe the speed or spread will impact the benefit of the variable rate discount and principal paydown if you adopt the strategy of paying your mortgage as a fixed rate.

What consumer trends are you seeing as people prepare for interest rate increases?

We’ve been seeing clients refinance early to take advantage of low-interest rates and renovate their home, give themselves an emergency fund, or pay outside debt. We’re also seeing parents take out reverse mortgages to gift down payments to their children instead of co-signing their mortgage.

How can reverse mortgages help people in today’s landscape?

A reverse mortgage helps borrowers over 55 purchase their downsized home, vacation home, or rental property with no impact on taxes or cash flow. They can also help you pay off existing debts while keeping your credit in check since you’re not required to make monthly payments, but rather pay it off once the house is sold. 

Parents can use a reverse mortgage to gift money to their children for home purchases or education without taking out their retirement funds. This also allows them to keep their credit intact in the event they need to use it.  

They can also be used to help navigate divorce for themselves or their children, or the loss of a spouse. Whereas traditional mortgages or lines of credit need to be requalified after a spouse passes away, reverse mortgages have a lifetime approval.