AgentBas- Mortgage Agent

A 25 point interest rate hike was announced as expected today from BoC. Some key points below:

- Overnight key interest rate now sits at 4.5% and Prime at most lenders now set at 6.70%

-This will increase most variable mortgages about roughly $15 per $100,000 mortgage (unless you are in a VRM- a variable product with a static payment)

- If you are in a VRM then more of your payment is now going towards interest vs principal and you may be reaching your trigger point- if you haven't already

- Fixed rates are unaffected by this announcement as always

- BoC is hoping this is the last hike in this rate hike cycle (finally!)

- Inflation continues to trend down, currently sitting at 6.3% down from it's peak of 8.1%

- Even with inflation coming down, we shouldn't expect any rate cuts in the near future- we are likely in a holding pattern for at least a few months, barring any sudden global economic changes

- A recession in 2023 is still very possible, but current forecasts show it could be more mild than originally feared

Still have questions, need explanations, or want to chat? Feel free to contact me anytime :)

If you want to learn more read the article below:

Bank of Canada says it can pause rate hikes as inflation set to ‘decline significantly’ - National | Globalnews.ca The Bank of Canada's key interest rate now stands at 4.5 per cent following eight consecutive increases aimed at cooling inflation.

Bank of Canada's 1st interest rate announcement is tomorrow. Expect an increase of 25 basis points. Will it be the last of this rate hike cycle? Hopefully BoC will shed some more insight tomorrow. Below BoC's 2023 interest rate announcement schedule.

A BIG 1.00% rate hike from the Bank of Canada today.

Key points:
- Considered a "quadruple hike" since the average hike is typically 0.25%
- Largest rate hike since 1998
- Hike due to continually rising inflation
- Inflation largely due Russia/ Ukraine war, ongoing supply chain issues, and excess demand in Canadian economy
- More hikes are likely throughout the rest of 2022 (BoC announcements scheduled on September 7, October 26, December 7)
- This hike will increase most variable rate mortgage payments by about $50/ $100,000 mortgage
- Fixed rates are unaffected by this announcement, but are expected to continue to rise as well
- The benchmark interest rate is now 0.75% higher than it was pre-covid
- Hike is expected to continue the recent trend of decreasing home sales and property value growth

Read the article below to learn more:

Bank of Canada's larger-than-expected interest rate hike is biggest jump since 1998 The Bank of Canada has hiked its overnight interest rate by 100 basis points to 2.5 per cent, following higher than-expected inflation. It is the biggest rate hike by the central bank since August, 1998.

Rates continue to go up! Feel free to connect to discuss how you can protect yourself in this rising rate market.

Many people don't know this but the Federal mortgage stress test (qualifying rate) is currently set at the higher of a) 5.25% and b) contract rate + 2.00%. With rates being so low since they changed the Stress Test rules, the majority of mortgages were being qualified at 5.25%. However interest rates, especially fixed rates have been going up quite a bit in the last few months. 5 year fixed rates for conventional purchases at most Big Banks are typically coming in at around 3.79% right now. Interest rates for rentals and refinances are even higher. A contract rate of 3.79% has to be qualified (stress test) at 5.79% (contract rate + 2.00%) instead of the 5.25% lenders have mostly been using recently. This means borrowers looking for a 5 year fixed product will qualify for a substantially lower mortgage than they were just a few weeks ago.

As a mortgage agent I have creative solutions around this issue where you will still be able to qualify at 5.25% (or even lower). Feel free to contact me to learn how :)

Here are the dates in 2022 when the Bank of Canada releases it's updated target for the overnight rate. For variable rate mortgage holders these are the dates that your mortgage interest rates could change (although in an emergency the BoC can change rates anytime). If there are changes to the overnight rate, thus your variable rate, they are usually made in 0.25% increments at a time.