Today’s Interest Rate Hike...AND…Our Thoughts And Advice.

You may have already heard that the Bank of Canada has increased the key interest rate by .5 percentage points, for the 6th consecutive time this year. We know that the government needs to curb inflation, and economically raising interest rates in necessary to do so. Alongside the financial markets, Paul and I were expecting a .75 or 1.0 interest rate hike. When the increase was announced at .5 basis points, we were pleased to see that it is an incremental increase which hopefully won’t disrupt the current fall market activity, too much.

In our recent preliminary check, we note that about 6-15% of listings on the market are selling at the moment. We are waiting for a couple of more weeks until TRREB releases the official numbers for October, but we are always watching the activity closely. It is ever most prudent for properties to be prepped, accurately priced and prepared when selling on the MLS open market, as with such few sales transacting, any and all competitive advantages are necessary if a Seller is motivated to sell right now.

With the current interest rate hike, we may see buyers who currently have interest rate-holds with their banks for the next 90 days or so, push to get into the market over the month of November, to precede the next rate hike in December. Hopefully anyone that needs to sell is able to, and anyone that has to buy now has an opportunity to with the previous rate-hold before the next rate hike.

Lastly, and ever-so-importantly, NOW is the time to look into your mortgage options as a current homeowner. Most Canadian’s are conservatively on Fixed Mortgages, but if you are coming up for a mortgage renewal, exercising an early break fee and locking in a new term at a lower rate may save monies for you in the long run. Or, if you are on a Variable Mortgage, now may be a time to look into fixing your mortgage, and being aware of the risk of a trigger rate. A trigger rate is:

The point at which your regular payment is no longer enough to pay all of your interest you’ve accrued since your last mortgage payment. This means your entire mortgage payment is interest, without any monies going into your principal down payment. When this happens your lender might contact you to adjust your payments so you don’t have negative equity payments. This would mean higher monthly mortgage payments to ensure your principal is being paid down.

If you need a mortgage broker referral feel free to reach out to us. We have many trusted market partners who have served our clients over the years.

With 30-35% and in some cases 40% of your household income going towards your mortgage payments, now is the time to prepare to ensure you are able to carry your property through the rate hikes and potential increase of your monthly mortgage payments. Making amendments and adjustments now could save you thousands of dollars in the long run of your mortgage term.

Any questions? Feel free to reach out. We are happy to chat informally.

Cari and Paul