Yesterday the Bank of Canada surprised all economists and financial industry professionals by an increase to the overnight target rate of 1.00%. This was in response to the continued rise of inflation across the country.  Most were only predicting an increase of 0.75%, so the 1.00% was higher than expected.

Here’s what you need to know about yesterday’s increase:

• The Prime rate pertaining to mortgages and lines of credits will increase to 4.70%; most will be today or at the first of the month
• Your discount off of your mortgage will still apply, meaning that if you have a mortgage at Prime -0.90%, your new rate would be 3.80% (4.70% – 0.90% = 3.80%)
• For every $100,000 in mortgage amount, it will cost you an extra $55 per month
• A Variable Rate or Adjustable Rate will determine if your payment changes when Prime does; call our office if you need help to clarify that
• The Bank of Canada indicated that they are predicting we will see additional increases by the end of the year in order to combat inflation.  Until Canadians slow down on spending, whether it’s cars, houses, entertainment or shopping, the Bank of Canada will do what it can to curb spending. You need to budget and plan accordingly with your finances in the next 12-24 months
• Avoid jumping to conclusions when you hear things in the media. We can do a full analysis of your mortgage if you reach out to us.  Please call us directly at 604-552-6190 or email trish@primexmortgages.com
  
• There are a number of options that we can look at when deciding how to handle future rate increases, whether it is locking in, transferring your mortgage, extending your amortization or consolidating other debts

As we have said before, it is important that you do not panic! Let us help you work out the best strategy for your unique situation.