The Mortgage Centre - R.D.M. Financial Consultants

Bank rate has increased again, for the 6th time, but not as high as expected. This leaves the door open for another increase in December. Bank prime is now at 5.95%
Many home owners are concerned with being able to manage payments. Now is not the time to panic! As was indicated in previous posts, all home owners had to qualify at the Stress Test rate at time of application. For many that rate was 5.25% . If you are in a variable term, you most likely had a discount on that variable by as much as 1.00% , so your current rate is just around the Stress Test rate. Yes your payment has gone up, but not beyond what the Stress Test deemed affordable.
Yes the bank rate will probably go a little higher. So, now is the time review your budget, tighten where you can and ride out the storm.
For some homeowners, it may be difficult to continue on a variable basis and locking into a fixed rate seems like a better option. If so then go short term, 1 or 2 yrs. These economic cycles have happened before and usually last 18 to 24 months. You want to be in a position to take advantage of lower rates when the Bank of Canada starts to lower rates.
No matter what your situation or what happens in the economy, seek professional advice before acting. A panic move now could cost more later on

With mortgage rates continuing to climb higher, homeowners with mortgages renewing are facing an important financial decision, long or short, fixed or variable? While payments will be increasing, remember this, when you took your mortgage, you were qualified at a Stress Test rate of around 5%. This means that while your payment may be going up, it should still be financially affordable. You may have to adjust your budget for other things, but your home should not be at risk.
Next thing to consider on renewal is long or short. We have been through difficult financial periods many times. In 1981/82 we had rates at 20%, in the early 90's rates were still in double digit territory. What we learned was that these times of high rates usually lasted 18 to 24 months. That being said, when renewing look at a 2 year term or if you are comfortable, look at a variable term. So when rates start to move lower your rate will come down too

With 5 yr mortgage rates now averaging upwards of 4.50%, the opportunity for variable borrowers to lock in has passed. Most variables done over the past 2 yrs have discounts of about 1%, so riding out the rate storm is a good strategy. Even if the bank rate goes up another full percentage point to 4.70%, which is more than likely, with your rate discount you are still below what a fixed rate would be.
Another thing to remember is to use the interest savings towards pre-payment to reduce the mortgage balance. This will help prevent 'payment shock' when rates do rise

Bank rate is up again! This time its 50bps pushing Prime to 3.20%. If you are in a variable or HELOC mortgage, expect your rate to increase by months end. And we are not done yet! Be prepared for 2 or 3 more increases before the year is up.
Fixed rates have also been steadily increasing with a 5 yr high ratio rate averaging 3.84% and conventional at about 4.09%. There are some rate 'specials' out there giving rates of 3.59% on a purchase

With mortgage rates on the rise, now is the time to look at consolidating debt and lowering monthly debt payments. With credit card rates ranging from 11.9% to 19.9% and unsecured credit lines at around 6.50% or more, refinancing the debt into your mortgage could reduce monthly payments by $500 or more depending on the size of debt. Call me for a no obligation or cost consultation and analysis of your personal situation

As we get through the second full year of the COVID Pandemic, real estate markets continue to climb to new heights. Mortgage rates increases are not far behind. Fixed rates, which are tied to bond yields, have been steadily increasing since mid 2021 and are now back to pre-COVID levels of Jan 2020.
Bank of Canada was expected to start prime rate increases late in the second quarter. But now with the new inflation numbers, the highest in 30 years, we may see the BoC start rate increases as soon as the next meeting on Jan 25th.
This will have little effect for mortgage borrowers qualification as they still need to qualify at the current Stress Test rate of 5.25%