Today the Bank of Canada announced that it is raising the prime rate by one-quarter of a percent for the third time in a row. The bank has observed that economic recovery is continuing to move forward but is improving much more slowly than anticipated. Despite the lackluster economic data the bank still increased the prime rate, as was widely expected. Some observers are suggesting that this is the last hike for many sessions to come. You can read the full press release here.
What does this mean to you?
If you are in a variable rate mortgage your monthly mortgage payment will increase over the next couple of weeks. Expect a letter from your lender indicating the new rate and payment amount. The prime rate charged on your mortgage will increase to 3.00%. This will also effect your lines of credit that are based on prime as well.
Should I lock in?
While the prime rate is slowly creeping up, it is widely expected that further increases aren’t possible given weak economic data, therefore we don’t think it is necessary to panic or rush to convert a variable rate mortgage into a fixed rate mortgage.
Fixed rate mortgages have come down to their historic low levels again last week. Fixed 5 year money is available for 3.69% (closings before Oct 31st).
Mortgages are very dynamic and the guidance that we offer is based on the circumstances of each individual. If you would like to review your mortgage to make sure that you are still on track please call us to have a quick chat.
September 8, 2010
