Thoughts on Interest Rate Hike
I’ve been reading a number of articles concerning the Bank of Canada’s Interest Rate hike of 0.25% yesterday, here are a few links:
http://www.financialpost.com/news/Canada+banks+hike+prime+lending+rates/3098548/story.html
http://www.financialpost.com/news/Bank+Canada+first+hike+rate/3096853/story.html
http://www.financialpost.com/news/lowers+fixed+mortgage+rate/3096986/story.html
My thoughts are as follows:
1. This rate hike was not unexpected and it is the first rate hike since 2007.
2. The sky is not falling, it is a rate hike of only .25%; which on a $100,000 mortgage, translates to $250 per year or about $20.83 per month.
3. The current rates on a variable mortgage are still prime less 0.5% on a five year term – 2.0%. Historically speaking, this is really cheap money.
4. 5 year fixed rates actually fell by 0.10% yesterday with some lenders.
5. Flattening of the yield curve typically translates to stability; which the markets like in general.
6. Our bank rate is as low as it has historically been – the only way to go from here is up; though I do not expect any kind of drastic increase in the short to medium term.
7. The Bank of Canada considers many things with interest rate hikes – value of Canadian Dollar in relation to other currencies; effects on borrowing to industry; returns on investments; as well as cost of borrowing for real estate and our mortgages.
8. If you have questions about your mortgage, whether you may want to refinance; or if you are in the market for a new property and have questions about whether you should lock in a rate before any future interest rate increases; contact your mortgage broker, or Vancouver Mortgage Broker, Nicole Turcotte of Mortgage Alliance - Meridian Pacific Mortgages Inc.
David Watts,
Notary Public
http://www.financialpost.com/news/Canada+banks+hike+prime+lending+rates/3098548/story.html
http://www.financialpost.com/news/Bank+Canada+first+hike+rate/3096853/story.html
http://www.financialpost.com/news/lowers+fixed+mortgage+rate/3096986/story.html
My thoughts are as follows:
1. This rate hike was not unexpected and it is the first rate hike since 2007.
2. The sky is not falling, it is a rate hike of only .25%; which on a $100,000 mortgage, translates to $250 per year or about $20.83 per month.
3. The current rates on a variable mortgage are still prime less 0.5% on a five year term – 2.0%. Historically speaking, this is really cheap money.
4. 5 year fixed rates actually fell by 0.10% yesterday with some lenders.
5. Flattening of the yield curve typically translates to stability; which the markets like in general.
6. Our bank rate is as low as it has historically been – the only way to go from here is up; though I do not expect any kind of drastic increase in the short to medium term.
7. The Bank of Canada considers many things with interest rate hikes – value of Canadian Dollar in relation to other currencies; effects on borrowing to industry; returns on investments; as well as cost of borrowing for real estate and our mortgages.
8. If you have questions about your mortgage, whether you may want to refinance; or if you are in the market for a new property and have questions about whether you should lock in a rate before any future interest rate increases; contact your mortgage broker, or Vancouver Mortgage Broker, Nicole Turcotte of Mortgage Alliance - Meridian Pacific Mortgages Inc.
David Watts,
Notary Public