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.

The Bank of Canada announced this morning another interest hike of .50%. Interest rates for variable mortgages and Home Equity Lines of Credit will rise by .50%.

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 $32/month by a prime increase 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.  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 major bank economists latest predictions indicate perhaps another .25% in Dec and again in January, and then in late 2023 early 2024 rates will drop to likely a new normal of prime around 4.5%. Assuming a Prime rate @ 4.50%, and your variable rate discount is 1%, your rate will be 3.50%. Consensus is that these higher rates are short term as the Canadian economy cannot sustain such high rates long-term.  It is likely we are facing another year and couple of months (until late 2023 or early 2024) before rates start to decline.   

​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