Let’s find out about the types of mortgage rates
Variable-rate mortgages and lines of credit are subject to Bank of Canada changes.
This will also affect Bank Prime rates, which can possibly cause financial stress.
Since the last year, we have seen a significant change in mortgage rates. Based on the bond market, fixed-rate mortgages had already been trending upward. If you have a fixed rate mortgage, you aren’t affected until it’s time to renew. Remember that with the rate increases, we are not in a low-rate environment. So, this allows us to look at the next course of action. We’ve also seen mortgage rate increases by triple the rates available in January 2022. But rates have risen, so here are answers to the questions I’m getting:
Should I jump into the market now?
Actually, my advice is always the same: buy when you are financially ready. Don’t jump the gun just because rates ‘may’ go higher. But by all means, if you’re thinking about buying, I can arrange a pre-approval so you’re protected from rate increases while you shop around. You can also check your budget. You can do so by visiting my Financial Budget page and download the template for free. You will be surprised how beneficial the budget calculation will be.
Should I lock in my variable rate mortgage ASAP?
Locking your variable rate depends on various factors. Your new rate with the hike might still be less than the current 5-year fixed rates, and you’ll still likely pay less if there is another 0.25% increase. So why pay more money than you have to? Stick with your original strategy of focusing on payment vs. rate. But if it’s going to keep you awake at night – or the few extra dollars are hard to find in your budget – then let’s talk about your conversion options. Remember though, you should be confident you’ll stay in a 5-year fixed mortgage for the full term. Breaking a fixed mortgage can result in some tough penalties.
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 really the best deal available. Got too much other 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? Is this the time to schedule a call?
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.