Interest rates in Canada might be going up and this time the warning should be taken seriously. Are you considering buying a house now? It seems that the Bank of Canada is considering increasing the benchmark interest rate (Source: Bank of Canada, CBC News). Now might be the time to consult with a mortgage broker or your banker to see if locking in your interest rates is a good option for you.
The Canadian economy has risen strongly over the past few years, and the rate hike policy since 2015 has yielded remarkable results, and the rate hike is coming soon. The central bank is aiming to raise interest rates to "Help" Canadians scale back the amount of debt they are putting on. The central bank to raise interest rates will inevitably affect the Canadian housing buyers, there are loans to the owners, investors and other groups. Canadian households currently have an average of $1.46 in debt for every $1.00 they earn.
How To Protect Yourself From Interest Rate Increases
A slight increase in the variable rate might be a reminder for some people to consider their mortgage options.
This raises the inevitable questions: Is now the time to switch out of variable-rate mortgages, or to blend and extend an existing fixed-rate mortgage to lock in today's low rates?
Fixed rates are at one of their lowest points in more than 50 years, so it seems like a smart idea to grab them while you can.
Other questions to ask yourself are:
- Are you looking to pay off your mortgage as soon as possible or have a low payment?
- What is your risk tolerance? If you have a low risk tolerance you might be better off taking a 5 year fixed rate mortgage.
- Is your cash flow tight? Then you also may want to look at a 5 year fixed rate mortgage.
- If you have high cash flow or higher risk tolerance you might want to look at variable or short term fixed rates.
There is no correct answer but more an individual decision which can be helped with proper education of the situation you are in.
If you have more questions or are interested in purchasing or selling property in the Okanagan; contact the Letnick Estates Team!
