The latest BOC interest rate and what it means for the average Canadian.
Today the Bank of Canada raised it’s interest rate to 1.5%. That is a 0.25% increase and the 4th increase we have seen since last Summer. Clearly the central bank believes that the housing market is stabilizing, commodities such as oil are starting to rally and businesses are starting to spend again.
Most Canadians are asking themselves, “How does this affect me?” This interest rate is the rate that retail banks have to pay on short terms loans so it affects what rate consumers pay for things like mortgages, lines of credit and and savings accounts.
If you currently have a variable mortgage you will see an increase on your mortgage payment. You will also see an increase on interest payments on your line of credit.
For those of you that are shopping for a home, you will now have to qualify at a higher stress test interest rate. (If you recall, I explained the new stress test rules that came into effect on January 1, 2018 in a previous blog Stress Test Blog) This can and will affect some home buyer’s affordability.
After this increase, many consumers will believe that a fixed rate mortgage will be the best course of action. While on the surface this could be true, experts say that the BOC will likely take a break from increases as there is still trade tensions to consider and Canada’s burgeoning household debt.
As a real estate professional, this best advice I can give you is to have a trusted mortgage specialist in your sphere. It is important to have someone you can lean on to give you the best advice with regards to your own financial situation.
If you need assistance with finding the right mortgage broker or mobile mortgage specialist for you, do not hesitate to reach out, I would be happy to help.