On July 12th, the Bank of Canada increased the overnight rate by .25% to 5.00%.
The recent increase brings the amount to 475 basis points in total since March 2022, taking the overnight rate to a new 22-year high.
Variable-rate mortgages and lines of credit will see higher rates and another payment increase. Based on the bond market, fixed–rate mortgages had already been trending slightly upward, although if you have a fixed mortgage, you aren’t affected until it’s time to renew. We’ve also seen increases before, only to see them decrease again. But rates have risen, so here are answers to the questions I’m getting:
Should I jump into the market now? My advice is always the same: buy when you are financially ready. Don’t jump the gun just because rates “may” go higher. If you’re considering buying, I can arrange a pre-approval to protect you from rate increases while you shop around.
Should I lock in my variable rate mortgage ASAP? That depends. Is the recent increase keeping you awake at night – or are the few extra dollars hard to find in your budget? If so, let’s talk about your conversion options. Remember, you should be confident you’ll stay on a fixed-term mortgage for the full term. Breaking a fixed-term mortgage can result in some tough penalties. It’s important to note that other options exist besides 5-year terms. Shorter terms of 1-4 years may be suited to your needs.
What if my mortgage is coming up for renewal? Don’t feel rushed or pressured by a renewal letter or call. Let’s discuss your options. We’ll review your renewal offer together, and I’ll shop around to see if it’s the best deal available. Do you have excessive debt? This may be the time to roll it into a new mortgage to boost cash flow and save on interest costs.
Should we talk? Yes, for sure. You should have confidence in your mortgage plan, and that’s why professional mortgage advice is so critical. I have access to a wide range of lenders and know the right questions to ask to assess your situation and make sure you have the best mortgage strategy.
Let’s talk today!