Last week the Bank of Canada announced a rate increase of .25% to their lending rate and the Banks quickly followed and increased their rates to match the .25% increase. With the rate increase most banks now have a prime rate of 2.95%.
What is interesting to note is that last year when the Prime rate was 3% the Bank of Canada made two drops of their rate for a total rate decrease of .5%. At that time the Banks chose to only drop their prime lending rate by .3% and pocketed the .2% as extra profit in their pockets. Now when the rate has increased by .25% they have added this full increase on so overall consumers are still paying too much.
Regardless of what has gone on in the past there has been much hype in the media about this rate increase. However, if you have a mortgage you should still be confident in knowing that rates are still near all-time lows. There is no reason to panic at this point. The .25% increase will increase the interest cost on your mortgage by $21 per month per $100,000 of mortgage. This increase in cost is only for variable rate mortgages or lines of credit.
At the end of the day it is an increase; however, everyone who has been in a variable rate mortgage for the past several years has benefitted immensely from having the variable rate. In making a decision on what to do going forward make sure not to panic. Take a look at your own financial situation and risk tolerance closely before looking at locking in your mortgage. Often times financial decisions based on emotion are not the best ones.
If you have any questions regarding your own personal situation please contact our office at 604-556-3893 or email at [email protected]
For more information on our mortgage products and your preferred Abbotsford Mortgage Broker please visit our website at www.ymscanada.ca.