As you know, a variable rate Mortgage and/or line of credit mortgage is based on the Prime Rate, here is your personal update from me on the recent Bank of Canada announcement.
At 9:00 AM EST today, October 24th the Bank of Canada did what we expected, they increased the overnight rate by .25% to 1.75%.
Bottom Line: The Bank of Canada believes the economy will grow about 2% per year in 2018, 2019 and 2020, in line with their upwardly revised estimate of potential growth of 1.9%. The Bank asserts that mortgage tightening measures of the past two years have "reduced household vulnerabilities," although the "sheer size of the outstanding debt means that vulnerability will persist for some time". That is Bank of Canada doublespeak. What it means is we may expect to two to three more rate hikes by the end of next year. PLEASE KEEP IN MIND this does NOT mean that we will not also see interest rates come down over the next few years.
We still are RECOMMENDING if you have a variable rate, to remember WHY you took your variable, so here are a couple of reasons to stay Variable or move to fixed:
+ Maximum 3 month interest penalty to break, re-finance, move etc.
+ Likely you are still paying a lower interest rate
+ Rates can go up and can go down
+ Options to SWITCH to other lenders mid-term to save money at lower cost
+ You want a "sure thing" payment for next few years and potential payment changes keep you up at night.
+ There is little to no chance of you making any changes on your mortgage during the term
+ Aren't likely to try to access equity, add a line of credit or make any other changes.
What does the change mean to you is that the prime rate on your mortgage or line of credit has moved:
How much will it affect me?
$13 per $100,000 you owe - your variable rate stays the same.
What can you do?
Stay the course, or
Lock into a fixed rate
What should you do?
This depends on your situation, remember the variable rate still provides the flexibility of a low penalty and likely still an interest savings.
If you CHOOSE to switch to a fixed rate, you should contact your lender to request their current rate switch offers.
Always consider the difference in rate between your current variable and the rate offered.
Once you have these offers you may contact our office to book a call ore-mail us and we will look at the best option for you.**Please keep in mind that we may be helping many clients with the same questions so our response time this week may be delayed.
BONUS: If you currently in a mortgage or nearing the end of your term now is the time to review options like borrowing against your equity or renewing to lock into a lower rate. Contact Us to Discuss these options
READ MORE HERE!
Remember: Rates are STILL very low and it is STILL a very good time to Re-Finance or Buy.
As always, if you know of anyone else that could use this same type of ongoing advice and support recommend them to us we would love to help them as well.
Any other questions? Feel free to reply and we'll respond at our earliest opportunity!
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What To Do Next? 😎
Reach out to us If you are THINKING about buying or Refinancing
Send This Info & Video to everyone you know who is buying or selling or maybe refinancing Remember: they may be thinking of a refinance, investment property OR know a friend who is currently thinking of buying.
Send them our way and we will give them an estimate of their before and after rule pre-qualification.
Contact us early to get ahead of the game, even if your mortgage is not up for renewal until next year.
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