If you have a variable rate mortgage, we wanted to connect with you prior to the next Bank of Canada meeting on July 13th. We fully anticipate a 75-basis point increase as we know it is the highest increase we have seen in decades. What this translates to is a $40 increase in monthly payments for every 100K in your mortgage. In addition to this hike, it would be no surprise to me if we saw another 75 basis points to bring the overnight target rate to the 3% as they have discussed quite openly in recent meetings.
Here is what you need to know:
Bank Prime presently is 3.7. Come July 13 it will go to 4.45%. By Sept 7th, if they follow through with what they are discussing, it will then rise to 5.2%. The last time Prime Rates were this high was back in 2007 and 2008.
I feel they will likely take a pause at that point, however, the economic factors at play are to be determined on how this will settle the economy.
Here is how you protect yourself as a mortgage holder:
Your discount off Prime will determine your principal/interest payment
If you have a renewal over the next 18 months- let’s get a rate hold in for you BEFORE July 13th and reach out to us at email@example.com.
Doing so today will help you secure a lower rate that will likely make sense for you to renew early, and you may see other benefits as well. We discussed this before with previous rate hikes on Global News before, which can be found here.
As always, our team is here to answer any mortgage-related questions you may have. We hope you have a wonderful rest of the week!
The Angela Calla Mortgage Team
*While we expect this with variable rates, we expect increases with fixed rates as well. We just do not have insight into the degree and the bond market has to react accordingly*