The Bank of Canada raised its benchmark interest rate by 0.5 per cent in early March and made it clear that more increases are coming. Tiff Macklem, the central bank’s governor said “the economy is now in a place where moving to a more normal setting for interest rates is appropriate,”:
As a result, mortgage holders are keeping a careful eye on the path of rate hikes and what they need for growing monthly costs. In February, 2020, the benchmark rate was 1.75 percent but the Bank of Canada shortly slashed it due to the COVID-19 recession. As price hikes are expected, there are a few ways homeowners can get ahead with their mortgage payments in this rising environment.
Not all mortgage holders will be impacted equally as fixed-rate mortgage holders will be shielded from the impacts of rising rates. Variable-rate mortgage holders will see their rates rise with each change in monetary policy. One of Canada’s largest lenders raised its prime rates to 2.7 per cent from 2.45 per cent shortly after the Bank of Canada lifted the benchmark rate.
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Looking for a mortgage or to refinance your home, contact Karla Badillo for any of your mortgage inquiries.