How High Can Mortgage Rates Climb?
It’s a question that everyone has been talking about lately. At the office around the water cooler, at the soccer games, and family bbq’s everyone has been asking how high can mortgage rates climb?
Notice anything different at the grocery store? Maybe the gas station? How about where you buy your clothes? The one thing these places have in common is that the higher inflation rate has caused the cost of goods to go up.
The Bank of Canada has set a target inflation of 2%. As of today, that rate has hit 7.6% well over the upper limits that the Bank of Canada is comfortable with. This has caused them to react by hiking the overnight lending rate in an attempt to curb inflation.
But here’s the thing: as the rate increases so to does our interest payments and costs. A Bank of Canada interest rate increase will affect variable rate mortgages along with home equity lines of credit. These two instruments are variable interest rate products and as the rate swings higher so does your mortgage payments and secured line of credit payments. To put this into perspective on a $100,000 home equity line of credit you can expect an increase of about $65 per month. On your average $500,000 mortgage this translates into a variable rate monthly increase of about $205.
What is the current Prime Rate?
What Can I Do If My Variable Rate Mortgage is Too High?
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