Interest Rates again set to rise?
Attention all Canadians! Interest rates are ready to soar this fall. Studies are showing increased growth in the Canadian economy. Things that have been becoming high in demand are employment, exports and consumer goods.
So with this in mind, Bank of Canada has no choice but to increase their rates so that the economy continues to run smoothly. Therefore, if rates were to remain the same for long periods of time, there is the risk for financial bubbles.
On July 12th, banks had already hiked up their rates from 0.50%-0.75%. Some economists believe we should expect another increase in rates in October and are set to increase to 1%
Prior to July’s increase, the average mortgage rate was 1.69%. However, only a month later, it spiked to 1.90%. Though it may not seem like a huge amount, consider the following example. On a $500K mortgage, you’re paying $480.00 more a year between both. Be aware that most banks could start increasing their fixed mortgage rates early similar to the increase earlier this year.
Is locking in your mortgage the best move?
It would be beneficial to take a thorough look at not only your mortgage, but also other loans you may have. This will help you decide if either a variable or fixed rate will work better for your situation.
Let us look at both options:
FIXED RATE: This would be a good option if interest rates are most likely to rise in the upcoming years. This will guarantee that you will be paying the same amount for either 2, 3, or 5 years.
VARIABLE RATE: This has seemed to be the better option for the past 10 years, and that is because, the increase for rates have been insignificant or if they have increased, it has been miniscule. Naturally, variable rate will always be lower than a fixed rate upon signing your mortgage package, however, it can fluctuate within the market as it can save you a huge amount in interest if the rates stay put or move up and down. You should always keep in mind, it will cost you a lot if rates were to rise.
Still unsure what the best option is for you?
Why not reach out to our Noble mortgage Agents to help you choose what’s best for your situation. If you are looking for the best mortgage broker, or the best mortgage rate, you can reach us at 416-241-2227 or send us an email to email@example.com