It appears the bottom is behind us, expect lending rates to rise.
This news is no reason to panic, we just want you to be aware of possible changes upcoming.
With Angela Calla Mortgage Team, we’re committed to helping you get clarity on financing, and get in front of market changes proactively with up to date information. We have a collision of circumstances where the bond market that impacts fixed interest rates and prime rate show all the indications to get ready for an increase.
Understanding how to brace for impact so you can decide your route of action.
If there is a .25 basis point increase in fixed or a variable rate mortgage based on a 25 year amortization, the impact is $13 per 100,000 in mortgage. With the average mortgage in Canada at $350,000 that will be $47 dollars a month.
1. If you have a fixed rate- review it, pending the renewal date and your financial circumstances you may want to redo and renew your mortgage for a longer period of time to take advantage knowing the bottom is behind us. If you do nothing, you will have no impact until your renewal date, however you will want to check in with us and consider increasing your payment now to avoid payment shock. This is reviewed annually for existing Angela Calla Mortgage Team clients automatically.
2. If you have a variable rate, you are the only one who can decide what you want to do: stay put or lock in. Your lender will be able to provide you with a lock-in offer valid only for a day, and you can take it or leave it. They can change their mind in 24 hours and change their offers. Check with us to ensure you don’t get “sold” an option that might not be right for you. Each lender is different, some allow us to help you, and others will make you go it on your own. Consulting with us will assist in helping you clarify your thoughts based on your future goals and risk tolerance. Ultimately, the borrower is responsible for their decision and the timing.
Remember once you lock in you penalty goes up significantly to exit that mortgage pending the lender at a later date, the benefit of having a variable rate is that more money goes towards principal as rates are lower and it’s only 3 months of interest to pay out completely. Rates generally only go up on variable products 0.25 per cent at a time.
3. Changes on a mortgage rate/product are limited to once a year, so if you have done a mortgage in the last year, you will likely have to wait till your anniversary date.
4. It’s likely the increases we will see will be gradual over a longer period of time, rather than a sudden substantial increase. At the moment, we have seen no increases. The next announcement for the Bank of Canada is July 12, 2017.
5. There is history. In November 2016 TD bank decided to raise their prime rate, not simultaneously with the Bank of Canada- so their prime rate has already been higher for their customers for several months http://www.cbc.ca/news/business/td-bank-mortgage-prime-rate-1.3830878
So if you have questions, we are here to help.
Angela Calla, AMP, is host of The Mortgage Show on Saturdays at 7 pm on CKNW, one of Canada’s Top Mortgage Professionals, a Woman of Influence and a CMP ‘Young Gun’. She has been helping Canadians avoid costly mistakes with mortgages and taking the fear out of financing for over 13 years from her Port Coquitlam Office. She can be reached at 604-802-3983 or firstname.lastname@example.org