Good morning! In light of the upcoming April Bank of Canada announcement, we’ve been getting a lot of messages from those of you with Variable Rate Mortgages, asking if you should lock in ahead of April’s potential rate increase: Rates are rising. Is it time to lock in your mortgage rate?

In her keynote speech last week, Deputy Governor of the Bank of Canada, Sharon Kozicki, asserted that the Bank of Canada is “prepared to act forcefully” to bring inflation back down to 2% by using its monetary policy tools. However, she also confirmed that the Bank is cautious about tightening its monetary policy too quickly which could further promote inequality and hardships for some households.

“While we will watch developments with respect to households closely as we proceed, it’s important to be clear: Returning inflation to the 2% target is our primary focus and our unwavering commitment. We have taken action and will continue to do so to return inflation to target, and we’re prepared to act forcefully” –  Deputy Governor – Bank of Canada, Sharon Kozicki, March 25, 2022.

Many economists are now predicting that the Bank of Canada will announce a 0.50% increase to their key policy rate in their April 13th announcement.

So…is now a good time to panic? Should you lock into a Fixed Rate Mortgage? Fear of the unknown is a large driver in the mortgage market, and there is a reason why 3/4 of mortgages in Canada are Fixed Rate Mortgages. People find comfort in predictability…and so do the Banks. But it is also important to consider that 1/4 of Canadians with Variable Rate Mortgages have been the big winners and paid less overall interest for over a decade? Inevitably, rates will rise. The “emergency” low rates of the pandemic cannot last forever. We cannot predict the future. However, what we CAN do is explore the past and learn FOR our future.

Let’s look at some quick and easy numbers:

Let’s say you have a $500,000 balance with a 25-year amortization and a 5-year closed Variable Rate Mortgage at Prime Rate minus 0.80% right now. That 0.80% is called your “discount”, and you will have your discount for your entire 5-year Variable Rate term. With Prime Rate currently at 2.70%, this means that your current interest rate is 1.90% (2.70% – 0.80% = 1.90%), and your monthly payment is $2,095.01.

In contrast, current 5-year Fixed Rate Mortgages with many of the Big Banks have now risen from approximately 3.89% to 4.14%! With a $500,000 balance and a rate of 3.89%, these fixed-rate payments would be $2,600.37. Therefore, there is now an interest rate difference of nearly 2% between Fixed and Variable Rate Mortgages, and this amounts to a savings of $505.36 per month for Variable Rate Mortgage holders.

But let us imagine the Bank of Canada does act “forcefully”, as they say, and raises its key interest rate by a half percent in April (raising Prime Rate to 3.20%), this will drive your Variable Rate interest rate to 2.40%.

$500,000 at 2.40% = $2,217.99/month

$500,000 at 3.89% = $2,600.37/month

With a Variable Rate Mortgage, you would still be saving $382.38 per month.

Let’s say that the Bank of Canada acts even more aggressively and raises rates to “pre-pandemic” levels. After all, Prime Rate in October 2018 went as high as 3.95% and stayed that way until April 2020, when it dropped to 3.45% at the beginning of the pandemic. In this scenario, even if the Bank of Canada raised their key interest rate and Prime Rate rose to 3.95%, your rate would still only be 3.15% (3.95% – 0.80%).

$500,000 at 3.15% = $2,410.25/month

$500,000 at 3.89% = $2,600.37/month

With a Variable Rate Mortgage, you would still be saving $190.12 per month.

Let’s go back even further in time to our last recession from October 2008 to May 2009. Granted, the world has changed a lot since then, especially the real estate market! During this time period, Prime Rate rose to 4.50%. In this scenario, even if Prime Rate rose to this past-recession rate of 4.50%, your rate would be 3.70% (4.50% – 0.80%) …again, still lower than the current 5-year Fixed Rates right now.

$500,000 at 3.70% = $2,557.07/month

$500,000 at 3.89% = $2,600.37/month

With a Variable Rate Mortgage, you would still be saving $43.30 per month.

Don’t forget…what goes up must come down! If you look at historical Prime Rate changes over the last 14 years in the chart below, you will see that Prime Rate has fluctuated from as high as 4.50% to as low as 2.25%. With a Variable Rate Mortgage, remember that rates may rise and fall multiple times during the term of your mortgage. While rates may be high for a period of time during your mortgage term, you may actually pay less interest overall due to the period(s) of time where you saved interest (when the Prime Rate was low).

You can always mitigate the risk of rising rates by taking advantage of the savings NOW. We would recommend that you put aside the $505.36/month into a savings account or use it to pay down your principal balance faster. This way, if/when rates rise, you will be ready.

But if you still feel do not feel entirely comfortable with a variable-rate mortgage that is okay as well. The type of mortgage that you choose is entirely your decision and depends on your comfort level. A variable-rate mortgage is not for everyone. If you feel more comfortable with a fixed-rate mortgage, then you should go for it. However, before you do, it’s important to consider a few things:

Flexibility – Not all fixed-rate mortgages are built the same. Some fixed-rate mortgage penalties offer more forgiving penalty calculations if you ever need to get out of your fixed-rate mortgage contract. In general, many of the Big Banks and some Credit Unions include the “original discount” that you receive from their posted rates in their fixed-rate mortgage penalty calculations (called the IRD, or Interest Rate Differential), while others do not. Including the “original discount” into the IRD penalty calculation can increase the cost of the penalty.

If you are set on staying with a lender who includes the “original discount” in their IRD calculations, you may be better off considering the 3 and 4-year fixed-rate options because the difference between the 3 and 4-year contract vs posted rates tends to be smaller than those of the 5-year fixed rates. In contrast, the penalty to break a variable-rate mortgage is just 3 months of interest.

Qualification – Did you know that you now qualify for a larger mortgage if you take a variable-rate mortgage? The current government-mandated stress test stipulates that we must use “the higher of the contract rate + 2%, or the 5-year benchmark rate” for qualification. For fixed-rate mortgages, the rate used for qualification would be approximately 5.89% (3.89% contract rate plus 2%). For variable-rate mortgages that are still under 3.25%, the lenders can still use the qualifying rate of 5.25%.

Rate – Different classifications of mortgages have led to an array of interest rate offerings across the mortgage market. If your remaining amortization is below 25 years, if the original purchase price of your home was under $1,000,000, if you purchased your home with less than 20% down, and/or if you have a lot of equity in your home, there may be better rate options out there for you.

Final Thoughts:

So, is it time to lock into a Fixed Rate Mortgage, or should you continue to ride the wave? There is no crystal ball. Ultimately, the decision lies with you and your comfort level after arming yourself with the knowledge above. Will rates rise? Yes, rates will rise someday. Perhaps someday soon. Will rates fall? Also yes, rates will fall someday.

We believe that the Bank of Canada will likely raise their key interest rate aggressively and quickly this year to try to curb inflation. However, we do not foresee them maintaining high-interest rates for a long period of time and believe that we will see rates start to fall again next year. With current real estate prices, high amounts of indebtedness across the country, pandemic recovery, and many other global factors, we do not believe that a high-interest rate environment will be sustainable for our economy.

We’re likely in for a bit of a ride but, with the right knowledge, tools, and a little bit of courage, we are confident that you can and will make a sound mortgage decision.

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Recently we were interviewed by CBC leading off the news in the business digest across Canada discussing how Canadians are getting into the market.

In summary, 4/10 Canadians get a substantial gift from parents, in the sum of $100,000 to $300,000 instead of co-signing. If a parent co-signs they have to qualify to service the debt, and that can be difficult when you have more than one child to assist. There are other solutions as well that parents can utilize, like reverse mortgages, if co-signing or the sale of an asset is not the best family plan for them at this time.

Multigenerational family planning to ensure the gift goes as far as it can, combine that with a budget and a consultation with one of our financial planning partners will help you gain clarity if that is an option you would like to explore with our help

Here are the clips from CBC for you to listen to:

If you have any questions at all, please don’t hesitate to reach out to our team and will be happy to discuss with the the next steps to get started on this process

Have a wonderful day!

– The Angela Calla Mortgage Team

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

With such a strong focus in the media on real estate today, have you ever asked yourself, “Why real estate is getting MORE expensive today than yesterday?”.

If this is the question you are asking yourself, then you are asking the WRONG question.

The REAL question you need to ask is “why does my money only allow me to buy LESS of a house today?”. Think about this for a second.  If you had $1 in your hand today, it is still $1 tomorrow.  You know it is still $1 because the currency that you utilize denotes this fact.  So why is that same $1 allowing you to buy FEWER goods and services for tomorrow?  There can be many economic reasons but it all boils down to a single common denominator – INFLATION.

There is much hype about inflation today so let’s have a quick chat about it.  Inflation is one of those topics that are either misunderstood or completely ignored by the general public.

Your money (dollars) has a fixed denomination to it. However, the VALUE of the goods and services around you is constantly changing (mostly increasing). Imagine inflation is like a clock. The seconds’ hand on the clock continually moves along advancing time (VALUE) regardless of what you do with your money. When you’re ready to deploy your money, inflation would have taken some of your purchasing power away as the VALUE of the goods and services you now require has increased, which is reflected in its PRICE. If your money had been static, perhaps sitting in a bank account or under your mattress, then your FIXED denominated money will afford you FEWER goods and services, as VALUE (represented by price) have GONE UP. This is WHY your money is buying you LESS of a house today than yesterday. The house is NOT getting more expensive, although it feels like it. Your money is worth LESS, so you’ll need more of it to acquire the same amount of the commodities or goods and services you seek.

When you consider money in this context, you will begin to understand why inflation is a big THREAT to your savings and personal wealth. Your only defence against inflation is INVESTING to GROW your money in order to stay AHEAD of inflation. Investing should be your goal, not savings. Investing is a necessity – at a minimum – to protect and preserve one’s wealth. When planned and executed properly, investing can propel and advance you financially to ease the effects of inflation.

I hope this short explanation on the topic encourages you to reflect on your own personal financial portfolio and how best to protect it against inflation.

Inflation doesn’t have to be all doom & gloom. There’s a strategy that you can use to benefit from inflation to build your wealth, our team works closely with financial planners who know best how to implement these strategies and ensure that our clients are able to utilize their wealth to their best advantage.

Happy Investing!

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

A credit score is so important when you are considering a home purchase. Well-qualified borrowers often don’t consider that there will ever be errors on their report, but sadly there are often mix-ups on reports or flat out incorrect information in terms of Credit Owed Marital Status Employment Birthdate. Such an example was noted in this CBC article with a couple from Ontario We recommend the rule of 2 in our book The Mortgage Code and have our method broken down here.

Consider the rule of 2:

• Lenders want to see 2 forms of revolving credit, like credit cards
• The limits should be no less than $2,000
• Clean history of payment for 2 consecutive years.
• Keep your balance below 20% of the limit on all credit cards.
• Make sure to pay off any collections, parking tickets and correct any old or incorrect reporting on your credit score. Credit cards may have an annual fee: ensure that it is paid.
• A credit score of 680 puts you in a good position for financing.

It is essential to review both your Equifax and TransUnion reports before applying for a mortgage. One error could drop your score or keep you away from being approved for best-rate mortgage financing.

Utilizing the free service of a mortgage professional we can shop multiple lenders protecting your score as most commonly people are unaware shopping for a mortgage or any loan when done consumer-direct reduces the score compared to when an independent professional who can shop multiple lenders with one check and help eligibility for “ new client specials” within the various lenders the client may already work with on some capacities.

Start your pre-approval (not pre-qualification) as soon as you are considering a purchase well in advance to ensure things go smoothly.

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Canada Reached Full-Employment in February

Statistics Canada released the February Labour Force Survey this morning, reporting a much more significant than expected 336,600 net new jobs, with the unemployment rate falling a full percentage point to 5.5%. This is the first time the unemployment rate fell below its pre-Covid level and reinforces the expectation for another Bank of Canada rate hike in April and as many as five more increases this year. Last month’s recovery more than offsets the losses that coincided with the Omicron lockdowns in January and points to the continued resilience of the Canadian economy.

The loonie jumped on the news, as did Canadian government bond yields.

Other indicators point to an increasingly tight labour market in February. Total hours worked surged 3.6% to a record high, while the employment rate rose 1.0 percentage points to 61.8%. Gains were most notable in the hard-hit accommodation and food services sector (+114,000; +12.6%), and information, culture and recreation (+73,000; +9.9%) industries. Employment increases were widespread across provinces and demographic groups.

Average wages increased 3.1% from February 2020, significantly faster than the 2.4% rate recorded in January. That could signal that inflationary pressures, already intense, continue to build.

 

This Labour Force Survey was conducted in mid-February, before the start of the Ukrainian War. since then, many commodity prices have surged, especially oil, gasoline, aluminum, wheat and fertilizer. This will accelerate CPI inflation worldwide, which dampens consumer and business confidence and reduces family purchasing power. The war has also contributed to continuing supply disruptions, all of which point to increased uncertainty and potentially slower growth.

The Bank of Canada is likely to hike interest rates when it meets again on April 13 by 25 basis points. Any more than that is imprudent given the risk of an economic slowdown. The outlook for the remainder of this year is more uncertain and likely to be volatile, depending on how long the war lasts. Right now, the likelihood for another five or six rate hikes this year and a few more next year. This, however, is subject to change

This article is credited to the Sherry Cooper Assoc.

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Spring is just around the corner!!

While nobody enjoys Spring cleaning, we can all appreciate having a fresh home!

Below are my favourite six Spring cleaning tips to help you tackle your home and get it looking its best for the season ahead:

1. Create a Playlist: Everything is more fun with a great playlist! Not only is music great therapy but it can make the cleaning process go by quicker and make it more enjoyable.
2. One Room at a Time: Everyone likes the aftermath and seeing their home all sparkly and fresh, but sometimes it can be an overwhelming process to get to that point. It is best to clean one room at a time, starting with the smaller ones or those that need the least amount of cleaning and work your way up to the larger, project rooms!
   
3. Declutter as You Go: Spring cleaning isn’t just about shining up the brass on the door and dusting. It is just as important to declutter your space as you go! Before you start cleaning a room, pinpoint items that can be discarded and go through closets and cupboards for anything that you can donate.
4. Think Green! Spring cleaning is starting the season off on a fresh, clean note. Don’t muddy that up with harsh chemical cleaners. In today’s eco-friendly environment, there are many eco-friendly and safe alternatives to regular cleaners. Vinegar is a great substitute in the bathroom or kitchen as well as combining vinegar, baking soda and water as a deep clean alternative. You can also opt for a steam cleaner to manage tile, hardwood floors, appliances and even outdoor areas as they only use hot water and vapour.
5. Don’t Forget The Fridge & Freezer: The best time to clean out your fridge and freezer is right before you do your grocery shop, so they will be at their most empty. Dispose of anything that is past its expiration date and any almost-empty items you won’t use. Before you restock be sure to wipe down the interior of the fridge with disinfectant and a damp cloth. The same can be done for the freezer but you’ll have to defrost it first!
6. Clean Air Reduces Allergies: Replacing furnace and HVAC filters is one of the most overlooked parts of Spring cleaning. Going as far as replacing your standard filter with a more robust one with a higher rating will help keep you even healthier (and allergy-free!) this year as they catch smaller particles to ensure your home is void of allergens, chemicals and even odours.

(This article is credited to the Dominion Lending Centre March newsletter)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Spring is just around the corner! Some of you might be anxious to buy or sell this season, so let’s take a look at the trends for the upcoming Spring market.

From a seller’s perspective, this is the best time to sell with motivated buyers and a huge demand that may diminish as the Bank of Canada raises interest rates and governments work to increase supply. As always, it is important to ensure that you properly list and market any home you are looking to sell to attract the right buyers.

For buyers, it is likely that Spring is going to be somewhat hectic as most individuals will be anxious to get into their new homes before interest rates rise further. You will want to be as prepared as possible if you are looking to buy this season by keeping a finger on new listings, and being prepared to extend an offer almost immediately after a viewing if you found what you’re looking for so it is not snatched up.

Having your mortgages pre-approved during this busy market will become vital as not only will it indicate to the seller that you will not have issues obtaining financing (assuming nothing changes between now and purchase with your job, savings, etc.), but it will also allow you to lock in the interest rate for up to 120 days while you shop. Don’t get caught waiving financing conditions quickly and then have to scramble later!

Another key component to note if you’re looking to buy this year is to consider moving further from your workplace. With supply issues currently within the housing market, it might be hard to find that perfect home nearby. Fortunately, most employers are now allowing remote work a few days a week If this is something you’re open to, you’ll want to keep an eye out for potential office space in any homes you look at.

If you are looking to purchase a home this Spring, download my app HERE to see what you can afford and don’t hesitate to reach out to me so we can discuss your goals and lock in your pre-approval for the best chance of success!

(This article is credited to the Dominion Lending Centre March newsletter)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Refinancing your mortgage refers to the process of renegotiating your current mortgage agreement for a variety of reasons. Essentially, allowing you to pay off your existing loan and replace it with a new one that better suits your needs.

When done properly, mortgage refinancing can result in a host of great benefits to further your financial success.

Some reasons you might consider refinancing include, but are not limited to, the following:

• You want to leverage large increases in property value
• You want to get equity out of the home for upgrades or renovations
• You are looking to consolidate your debt
• You have kids headed off to college
• You are going through a divorce
• You want a better interest rate
• You want to convert your mortgage from fixed to variable (or vice-versa)

Not only can refinancing help to reduce financial stress and help get you back on track for your financial future, but additional benefits include:

1. Access a Lower Interest Rate: One reason to refinance your mortgage is to get a better interest rate. While a low interest rate isn’t everything (you also want to consider your mortgage terms, penalties, etc.), there is no harm in looking around! As your dedicated mortgage professional, I have access to dozens of lenders and can shop the market for you to see if there is a better mortgage product to fit your needs!
2. Consolidate Your Debt: There are many different types of debt from credit cards and lines of credit to school loans and mortgages. But, did you know that most types of consumer debt have much higher interest rates than those you would pay on a mortgage? Refinancing can free up cash to help you pay out these debts. While it may increase your mortgage, your overall payments could be far lower and would be a single payment versus multiple sources. Keep in mind, you need at least 20 percent equity in your home to qualify.
3. Modify Your Mortgage: Life is ever-changing and sometimes you need to pay off your mortgage faster or change your mortgage type. Maybe you came into some extra money and want to put it towards your mortgage, or maybe you are weary of the market and want to lock in at a fixed-rate for security. It is always best to do this when your mortgage term is up, but talk to a mortgage specialist about potential penalties if waiting is not possible.
4. Utilize Your Home Equity: One of the biggest reasons to buy in the first place is to build up equity in your home. Consider your home equity as the difference between your property’s market value and the balance of your mortgage. If you need funds, you can refinance your mortgage to access up to 80% of your home’s appraised value in cash!

While refinancing can help you tap into 80% of your home value, it does come with a price. If you opt to refinance during your term, it is considered to be breaking your mortgage agreement and it could end up being quite costly.  It is always best to wait until the end of the mortgage term before any refinancing is conducted, but make sure you’ve planned several months in advance so you have to time to weigh your options before you need to renew.

In addition, refinancing can prevent you from qualifying for default insurance which in turn can limit your lender choice. Lastly, you’ll be required to re-qualify under the current rates and rules (including passing the “stress test” again) to ensure you can carry the refinanced mortgage.

If you are stuck or wondering if mortgage refinancing is right for you, please don’t hesitate to reach out to me today! I would be happy to review your current mortgage, financial goals and future plans to help determine the best solution to fit YOUR needs.

(This article is credited to the Dominion Lending Centre March newsletter)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

As predicted from the Bank of Canada announcement today, they have made an increase of prime rate by o.25% and the banks will follow. This means that there will be a $13 a month increase per $100k on your payments for variable-rate mortgages. If you have a $500k variable rate mortgage expect an increase of approximately $65.00/month. We were also asked to cover this announcement in a Global News interview this morning. (Note: This will not affect fixed-rate mortgage holders)

We are still near historic lows for variable rates, and we would need another four or five increases to match the current fixed rates if your discount off prime is approx. 1%.

With economic uncertainty around the world, I’m not certain rates are in a rush to rise as originally planned.

So, consider this as the signal to review your mortgage and consider your options to safeguard yourself and ensure you have an emergency fund set aside. For some, you may even consider locking in that variable rate to avoid the eventual increases, breaking your mortgage to consolidate debt or getting a better rate.

If you have any questions on reviewing your mortgage, renewal, debt consolidation, or upcoming purchase, know that we are here to help!

Many thanks,

The Angela Calla Mortgage Team

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

I just wanted to share my message to any of you variable rate mortgage holders who are feeling apprehensive about the Bank of Canada’s rate increase today.

To those of you with fixed-rate mortgages, this should not affect you at all.

📣 Attention Variable Rate Mortgage Holders: Do Not Panic.

👉 The Bank of Canada raised its key interest rate by 0.25% today – just as they have been telling us that they would.

Citing uncertainty due to the unprovoked invasion of Ukraine, high inflation, and a stronger than expected first-quarter growth, the Central Bank did just as we expected.

🧐 The biggest question is…”SHOULD I LOCK IN?”

Remember: It is just a 0.25% increase. We knew this was going to happen at some time or another! It was part of your mortgage strategy.

Please consider the following:

🔹 The monthly payments on a $500,000 mortgage with a 25-year amortization and a Variable Rate of 1.50% were previously $1,999.68 per month.

🔹 A 0.25% increase in rate to 1.75% increases your payments to $2,058.95, which is a difference of only $59.27 per month. If you have a static payment variable rate, your payment won’t change at all.

🔹 If you were to lock yourself into a 5-year Fixed Rate at 3.29%, an average 5-year fixed rate in the industry right now, your monthly mortgage payment would be $2,441.25. That is a difference of $382.30 per month or $4,587.60 per year! 😱

🔹 In addition to this $382.30 extra per month, you would be changing the flexibility of your mortgage. If you ever need to break a Variable Rate Mortgage, the penalty is just 3 months of interest (around 0.5% of your mortgage). In contrast, penalties for breaking Fixed-Rate Mortgages are determined using the “Interest Rate Differential”, a calculation that can be up to 4.5% of your mortgage balance!

✳️ The Bank of Canada would have to raise their Key Interest Rate SIX times before you arrived at where Fixed Rates are right now, as they usually move their rates in increments of 0.25%. It’s important to keep in mind that the Bank of Canada makes just 8 rate announcements per year.

✳️ Prime Rates with the lenders will likely rise from 2.45% to 2.70% today. The highest Prime Rate has been in the last 12 years is 3.95%…only 1.25% higher than today.

I’ve done the calculations, and even if the Bank of Canada increases their rate by 0.50% per year for the next 5 years, you will still come out thousands of dollars ahead with a variable rate mortgage right now.

➡️ Remember, the Banks LOVE Fixed Rate Mortgages, and would love to see you locking into those fixed rates right now. The Economists that you often see quoted in the news are paid by the Banks. These same Economists have been predicting a rate increase of 1.50% or higher for over 10 years…and they have been WRONG. Historically, Variable Rate Mortgage holders have always “won” the rate game.

So…Don’t panic! 😎 Keep calm, stick with your strategy, and remember that the sky is not falling.

📣 NOW is the time to be taking advantage of this ultra-low rate environment!

✅ Put aside that $382.30 per month into a savings account, if you are concerned about rates rising in the future, or ✅ Use your prepayment privileges that came with your mortgage to make extra payments to pay down your mortgage balance quicker.

✅ Be PROACTIVE!

And CONGRATULATIONS on all of the money you have been saving!! 🎉☺️

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

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