We’ve been hearing rumblings of a rate increase over the past few weeks, and on January 17th, the rumours became true as the Bank of Canada increased it’s lending rate by a quarter point to 1.25%.  This in itself causes confusion and concern amongst Home Buyers, and there aren’t many outlets that are offering clear information on what this means going forward.

We’ve spoken with a number of experts on what this means, and we wanted to give you a few fast facts on the interest rate increases, who is affected (this may surprise you), and what this means to your Purchasing Power:

-       The interest rate increase works out to an additional $13/month per $100,000 of mortgage (i.e. $39/month on a mortgage of $300,000)

-       Variable rates increased from 2.64% to 2.89%, which represents a monthly payment increase of $38 on a mortgage of $300,000

-       5 year Fixed Rates changed from 3.09% to 3.19%, which represents a monthly payment increase of $15 on a mortgage of $300,000

-       The Qualifying Rate (which is what the new mortgage stress test is based on) has not changed (i.e. your Purchasing Power has not decreased)

 

If you have any questions regarding mortgages or the purchasing process, please don’t hesitate to contact us!  We have experienced team members who will be able to answer your questions and assist you with the process.