*Paid Business Feature*
It seems that rising interest rates are on everyone’s mind these days. With rates rising rapidly during this pandemic recovery phase, those shopping for a mortgage are wondering how this will impact their futures.
If you have revolving consumer debt, such as a Line of Credit or Home Equity Line of Credit (HELOC), or perhaps a variable rate loan or mortgage, you’ve already felt the effects of the recent Bank of Canada announcements, which have translated into prime rate increases by all lenders.
Currently, prime rate is 4.70 per cent, up 1 per cent from mid-June. Seem high? Here’s some perspective: In July 2015, prime rate was 2.70 per cent, which increased three years later to 3.70 per cent in July 2018. Then in October 2018, it rose to 3.95 per cent. Typically, changes to the prime interest rate are made rarely and in small (usually .25 per cent) increments.
During the COVID-19 pandemic, from roughly March 2020 to March 2022, prime rate sunk to 2.45 per cent, largely to prevent any additional burdens on Canadian wallets, while continuing to service ongoing interest rate expenses during a difficult time for many.
However, as we emerge from COVID restrictions, the next big story has been high inflation, which the Bank of Canada Governor has vowed to control by raising interest rates.
Do you see a pattern emerging? Bank of Canada has, and it will continue to use the leverage of raising or lowering interest rates to respond to issues in our economy. It’s widely thought we can expect even more increases in the future, eclipsing the October 2018 high.
So what to do in the meantime? Perhaps you are considering purchasing a home and require mortgage financing. Maybe your current mortgage is up for renewal in the next year or so, but at a much lower rate. Or you were hoping to refinance for home renovations, consolidate debts, etc. The reality is that as prime rate has increased, so have fixed rates. Now the decision is which one to choose? How do I decide? Who can help?
Kingston Mortgage Solutions will have some strategies that you can consider in their next article, so stay tuned! In the meantime, if you have any questions, one of their knowledgeable Mortgage Agents or Brokers would be glad to assist you navigate these turbulent times. Visit the Kingston Mortgage Solutions website to learn more.
David Sutherland is the Principal Broker at Kingston Mortgage Solutions.
This article is sponsored by Kingston Mortgage Solutions, who also submitted the content. If you are interested in a Business Feature on Kingstonist, contact [email protected]