The Bank of Canada has decided to keep the Prime rate unchanged for the second consecutive time. With rising costs of fuel and food, and increasing intrest rates over the past year there are now signs of a possible soft landing and an imminent recession by the end of 2023 or early 2024, which may result in a potential rate cut in Prime. This could provide relief to those with variable or adjustable-rate mortgages.

As per the Bank's April Monetary Policy Report, global growth is projected to be 2.6% this year, 2.1% in 2024, and 2.8% in 2025. In Canada, demand is still higher than supply, and the labor market remains tight, while the housing market activity is low. The Bank predicts that CPI inflation will decline to around 3% in the middle of this year and then gradually fall to the 2% target by the end of 2024. The Governing Council decided to keep the policy rate at 4½%, and quantitative tightening will continue to complement this restrictive stance.

If you have a variable or adjustable-rate mortgage, you can choose to continue with it or lock into a fixed rate. Statistics show that most clients benefit from variable or adjustable-rate mortgages, but if you're concerned about further rate increases, you can consider increasing your payment amount and frequency to offset and reduce your cost of borrowing. Alternatively, you can lock into a fixed rate, which will guarantee no further rate increases for the remaining mortgage term.

The housing market has seen multiple offers on homes for sale and continuous property value appreciation in most areas due to low inventory and increased consumer confidence with the knowledge that rate hikes are leveling off. If you already own a home, it's recommended to ride out the interest rate storm. However, if you're looking to purchase, it's important to be aware that the bottom of the market may have already occured based on sales data. It's also recommended to monitor spending habits, audit bank statements to cut unnecessary expenses, and consolidate high-interest debt as soon as possible.

For the complete Bank of Canada announcement, click here. The next update from the Bank of Canada will be on Wednesday, June 7, 2023. If you have any questions or concerns about the announcement or want to discuss your current financial situation, please feel free to reach out.

I am here to help,

Aaron

The Bank of Canada today increased its target for the overnight rate to 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank is also continuing its policy of quantitative tightening.

 What does this mean for variable rate mortgage holders?

 If your mortgage is with a lender that adjusts the payment when prime rate changes your payment will be increasing and you will be notified when prime rate changes.  

For every $100,000 mortgage your payment will increase by approximately $17/month by a prime increase of .25%

​E.g. if your mortgage is $400,000 your payment will increase by $68/month.

 If your mortgage is with a lender that does not adjust the payment when prime rate changes your payment amount will remain the same, however the amount that goes towards principal and interest will be adjusted accordingly.  This would increase the amortization.  Your payment will only increase if rates go higher than the “trigger rate” on the documents you signed with your notary/lawyer.  The “trigger rate” is different for every mortgage so please refer to your mortgage documents. 

The government is reviewing current loan to value and debt servicing guidelines and expected to announce changes for qualifying new mortgages by the end of April 2023.

Economists are still predicting rates to decline in the next year or so and expecting prime rate to end up in the 4.5%-5% range.  

The Bank of Canada has indicated that this could be the last rate increase for some time.

Here is the history of prime.  https://www.mcap.com/Prime-Rate-History

​Information provided by Sheryl Elsom  https://www.sherylelsommortgages.com

The next scheduled Bank of Canada rate announcement is Wednesday March 8, 2023.

​Official Press Release HERE

​Please do not hesitate to contact me should you have any questions or would like to discuss further.

 Thanks,

​Aaron

The Bank of Canada increased prime rate by .50% effective today Thursday Dec 8^th, 2022. Prime rate is now 6.45%.

What does this mean for variable rate mortgage holders?

If your mortgage is with a lender that adjusts the payment when prime rate changes your payment will be increasing and you will be notified. 

For every $100,000 mortgage your payment will increase by approximately $32/month by a prime increases of .50%E.g. if your mortgage is $400,000 your payment will increase by $128/month.

If your mortgage is with a lender that does NOT adjust the payment when prime rate changes your payment amount will remain the same, however the amount that goes towards principal and interest will be adjusted accordingly and your amortization will also increase.

With the current higher interest rates the government has indicated the potential for increased amortizations on existing insured mortgages, however subject to insurer approval.  It is a possibility we will see increased amortizations for non-insured mortgages going forward.

 In the next couple of weeks the government is expected to announce changes to the existing stress test for qualifying new mortgages which is the greater of the benchmark rate or 2% above the contract rate.  It will likely be reduced to the greater of the benchmark rate or 1% above the contract rate.

The latest predictions indicate more rate hikes early next year are likely before levelling off

Here is the history of prime.  https://www.mcap.com/Prime-Rate-History

​Information provided by Sheryl Elsom  https://www.sherylelsommortgages.com

The next scheduled Bank of Canada rate announcement is Wednesday December 7, 2022.

​Official Press Release HERE

​Please do not hesitate to contact me should you have any questions or would like to discuss further.

Thanks,

​Aaron

On November 24, 2022, the BC Government passed amendments to the Strata Property Act which take immediate effect. There are two significant changes that will inpact consumers:

• all rental restriction bylaws are removed, except for bylaws restricting short-term rentals such as Airbnb or Vrbo.
• all age restriction bylaws are removed, with the exception of “seniors only” (55-plus) rules. This means that a strata will no longer be allowed to have 19-plus age restrictions.  
• the housing supply act, will help speed up housing development and increase supply by giving the Province the power to set housing targets in municipalities with the greatest need and highest projected growth.