Bank of Canada raised it key lending rate? What does it all mean for us?

I received a very informative email from one of my favourite mortgage brokers, Angela Creed, that even I find insightful & informative:

“Hi Leanne,
If you haven’t already heard, the Bank of Canada has raised its key lending rate by 0.50%.

Watch this short video on what it means for you and your mortgage.

How does this affect my current mortgage?

If you have a variable rate mortgage or variable home equity lines of credit (HELOC’s), either your monthly payment will increase or more of the payment will be allocated to the interest, instead of the principal. Your lender will communicate any increase and the effective payment date.

Fixed-rate mortgages are not tied to prime rate and aren’t affected.

Recommendations:

Variable Rate Mortgages
It’s natural to be tempted to lock in an as soon as you see rates starting to climb but you’ll still save money by staying variable. It will take several more rate hikes to narrow the gap between variable-rate mortgages and their fixed-rate counterparts. Beware! Fixed-rate mortgages also come with a much larger penalty to break your mortgage. If you’re still feeling uneasy, let’s have a conversation about your specific options.

Fixed-Rate Mortgages
Fixed rates are also rising, though not in response to this particular increase. If your mortgage is coming up for renewal in the next 6 months, let’s look into renewing as early as possible.

Lines of Credit (HELOC)
If you owe a considerable amount to your HELOC, it may be a good time to consider converting that HELOC into a mortgage.

“I am thinking about purchasing in the coming months. What should I do?”
Get pre-approved ASAP! A pre-approval is a smart move anytime you’re considering a purchase, but especially in a rising rate environment. A pre-approval will lock in your rate for up to 120 days so you’re protected from rate increases while you shop around.

If you have any questions or would like to discuss your specific details, please book a call with me.
Angela Creed
President - Best Bet Mortgages
Ph: (604) 619-2996