💔 Mortgage Rate Regret? Why Paying the Penalty Might Actually Save You Thousands

Refinancing Sweet Spot: Calculate If Your Penalty Is Worth Paying

If you renewed your mortgage between mid 2022 and late 2024 at a high fixed rate, you are experiencing "Rate Regret" as market rates fall by up to $2% to 3%. Don't feel trapped—this is a massive financial opportunity.

History Repeats: Why We Are in a "Sweet Spot".

We've seen this play out recently, and the results were dramatic:

• The 2020/2021 COVID Refinancing Boom: This occurred when the Bank of Canada (BoC) dropped its rate by almost 2.00% in a short period

  
  

• The Result: This period led to over one-third of all mortgage originations being refinances, as homeowners took advantage of low rates to extract equity, reduce monthly payments, or shorten terms—all equating to significant savings.

  
  

The rate drop today is even more pronounced:

• The BoC overnight rate has dropped by over 2.75% from its peak of 5.00% (reached between June 2023 and April 2024) down to 2.25% today, and expected to hold here for some time

  
  

• This creates the same, if not a larger, opportunity for mortgage holders today as was seen during the pandemic boom. The recent and rapid decrease in rates has created a Sweet Spot opportunity for homeowners.

🏦 The Bank’s Penalty vs. Your Savings

While banks use intimidating penalties to keep you locked into high rates, the penalty is not always a final verdict—it's just a number to be factored into a larger equation:

• Paying that penalty and remortgaging can result in significant savings under the right circumstances

  
  

• The large penalty cost looks scary, but when the difference between your current high rate and the new, lower market rate is large enough, the interest savings will quickly offset that penalty cost.

The Math: Rate Sweet Spot Model

The recent and rapid decrease in rates has created a sweet spot for higher fixed rates with more than a year to go.  The 2 examples below represents the savings replacing a higher rate mortgage with 3 years to go, with a new 3 year mortgage at today’s rates.

Example

Current: 5 yr, $500,000 Mortgage @ 5.10% with 3 years remaining

Proposed: Replace with 3 yr, 4.0% Mortgage

What if your Current Mortgage has a better 4.75% Rate?

You still save.

💡 The Only Way to Know: Run Your Specific Numbers

Your situation is unique. The only way to know if refinancing makes financial sense for you is to run the numbers.  Don't let Rate Regret cost you thousands over the next few years.

Your Next Step: Your Free Analysis

Find out if you can benefit from falling rates today with a 5-minute call, or use this tool to calculate yourself.  

https://cma.me/brent-ellacott/wizard

If you have more than a year left in your mortgage, you are likely to save.