Today's Rate Hike by the Bank of Canada
So if you follow us on Tiktok you would have seen a recent video with my prediction on what the Bank of Canada was expected to do with their interest rate announcement today. I missed the mark by predicting a .75% rate increase, as did many economists and financial experts. The Bank of Canada announced that they were continuing with their quantitative tightening by increasing rates by .50%
While this rate hike is lower than expected, it definitely still has real world effects for borrowers that are in a variable rate mortgage.
Lets put this rate hike of .50% (50 basis points) into dollar terms:
For every $100,000 in borrowed money under a variable rate (ARM) mortgage this new rate hike translates into $28 more per month that you would be paying for this loan. And for the average $500,000 mortgage this rate hike works out to $140 per month to carry that variable rate mortgage.
With this being the 6th rate hike this year (we started the year with the policy rate at .25%, and are now sitting at 3.75%) how high can the Bank of Canada go? Well they have put some hints out there that we can also expect another hike to occur with their next Bank of Canada rate announcement on December 7th. Will the Bank of Canada increase rates a further .50%? Possibly. We still know that inflation is higher than the 2-3% target that they are trying to achieve (by a long shot)
If you’re considering a fixed rate switch now might be the time to get the ball rolling. Feel free to reach out to us so we can shop a variety of lenders for you to find you the best deal
