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Let’s Talk Mortgage Rates!

The Bank of Canada has announced an increase to the prime mortgage rate by 0.75% basis points to 5.45%. Variable-rate mortgage clients will see an increase in their monthly payments or in their amortization.

Economists are predicting that this could be one of the last increases to the overnight rate. They are cautiously optimistic that inflation will continue to trend towards the target. Fixed mortgage rates seem to be stabilizing and may be near their peak.

Should You Lock In!?

The fixed rates for mortgages are still higher and may continue to rise. So locking in will not be better on the payment. It will give you a constant payment for the term you lock into.

If you are in a variable rate mortgage, you are most likely paying BELOW PRIME as a rate. An example is Prime (today 5.45%) minus 0.50 of 1% would equal 4.95% or 4.45%. You may even have a product that is Prime minus 1.15%. Knowing what the actual Prime will be today after the rate increase is what you measure your rate to.

One way to stay ahead of the increases is to up your payment to what the five-year fixed rate is today.
This would keep you ahead of payment increases. Most people with mortgages do not realize that just because the fixed rate payment does not change, it is not protecting where it will be when you come to renewal. We are also suggesting to our clients to increase their fixed-rate payments to prepare for where the rate could be when renewal comes. The payments could double on renewal. So we suggest easing into the rising rates while always protecting yourself and getting the best for your hard-earned dollars.

If you have questions or concerns about mortgages, please reach out to Donna or Jordon- 705-429-5492.

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