NEWS

The never-ending movement of interest rates continue to not let us down. They are on the move again and expected to be moving even more come October 26^th, 2022 when the Bank of Canada makes their next announcement.

The banks, along with other mortgage lenders have been pushing Fixed Mortgage Rates up a bit further the last 24 hours. Naturally, we are just so excited about this news, we can hardly hold our enthusiasm.

Canadians have recently been battling interest rate hikes by taking shorter term rates, thinking it will buy time for the rates to come down in a couple years. We are not really too sure they will when those mortgages are due for renewal, but in the meantime, the Big Banks have increased their short-term rates due to their popularity. Rate hikes for primarily 1 to 3 year terms have ranged from 10 to 55 basis-points (Bps). Not to be left out, many monoline lenders have jumped on-board and are doing the same with their short-term fixed rates.

As a mortgage shopper, what should you do? Well, the answer is different for everyone. Compare these short-term rates against a 5-year fixed and where the payments would sit with your budget. Maybe you feel it is still worth to mitigate these fixed rates by going with a variable or maybe a hybrid that supplied both a fixed and variable. Term selection would be the first thing to review regarding your risk management around interest rates. Generally, the more qualified and liquid you are, the more you can gamble on shorter terms or variable exposure.

As we are approaching the end of September, economists believe that the Bank of Canada will most likely deliver another rate uptick of 50 Bps to 75 Bps on October 26^th, 2022 therefore, moving prime once again, to around 6.20%. With this type of increase in prime, where are your thoughts on “Fixed vs Variable”?

Sources: Bank of Canada, Canadian Mortgage Trends & General Reading