What does the rate increase mean for me?

A few things about the last Bank of Canada rate increase.

The increase in the Bank of Canada’s (BOC) means that the variable rate increased from  3.70% to 3.95%

What does this mean for you?

Variable Mortgages:

  • Your mortgage payment will increase
  • Your discount will stay the same – for example if your rate is prime minus 1%, you will still keep the discount. Your interest rate will now be 2.95% (3.95%-1%)
  • You can expect aprox $12.50 increase on every $100,000 of mortgage you currently have

Line of Credits:

  • Your minimum payments will increase as your line of credit is based on prime +.50% (for example)

Fixed Mortgages:

  • There is no change to the fixed mortgage rate at this time

Qualifying Rate

  • Nothing has changed with the qualifying rate. Currently all mortgages are qualifying at Bank of Canada Benchmark rate of 5.34% or contract rate plus two

 

Should I lock in my variable mortgage?

If you look back at variable vs fixed, historically the variable mortgage has come out the winner.

To lock in your mortgage rate to a fixed at this time is a personal choice.

 

Why stay variable?

While the variable rate is still low (and it is still low, regardless the rate increase), this is the time to make those additional payments by using your prepayment options and reduce the mortgage principal as much as possible.

Its important to remember why you choose to go with a variable rate. What’s changed?  Stay the course.

Were you thinking of selling or moving? If so, the penalty is lower on the variable mortgage – 3 months interest.

Deciding to lock your rate from variable to fixed is a personal choice and each person has a different situation.

Remember the variable rate is still the most flexible and offers the lowest mortgage payment

If you want to lock into a fixed rate, please contact your lender or contact us and we can connect you with the lender to see what they are offering you for a fixed rate.

ana@citymortgagegroup.com | 905-870-0513

Ana Cruz

 

 

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