Article sourced from my Fall 2017 Newsletter
For the first time in 7 years, the Bank of Canada raised its key interest rate to 0.75%, an increase of 25 points. The key interest rate is the rate at which the Bank of Canada lends money to the country’s various financial institutions, so while this is a sign that our economy is doing well, the increase will have an impact on mortgage rates.
According to the Québec Federation of Real Estate Boards (QFREB), the hike in the key interest rate will have a direct impact on variable-rate mortgages, as well as on short-term fixed-rate mortgages (6 months and 1 year). This means, as a homeowner with a variable-rate mortgage, a home line of credit, or any type of loan associated with the key interest rate, you will see an immediate impact on your interest rate.
From now until the end of the year, the QFREB believes we will most likely see a gradual increase in 5-year mortgage rates. Some banks already started to increase their rates when the Bank of Canada rate increase became imminent.
We will most likely see a gradual increase in 5-year mortgage rates
While the increased rate will impact your mortgage payments, the increase will not be significant. For example, for a total loan of $250,000 at an interest rate of 2.70%, a borrower will see their monthly payment increase from $1,144.97 to $1,176.71 at a rate of 2.95%, a difference of $31.74.
I send out two newsletters each year with the most recent market news as well as tips and tricks for moving, setting up your home, increasing your home’s value and getting the most bang for your buck when you decide to sell. If you’d like to receive a printed copy of the newsletter, contact me today to be put on the mailing list. Click on the image to read this season’s newsletter as a preview of what to expect in future editions.
Have a question? Don’t hesitate to get in touch. I provide concierge service to all my clients, from finding you the perfect home to recommending you trusted professionals for renovations and more.
Back to News