Bank of Canada Announcement

This morning the Bank of Canada announced that it would be increasing its overnight rate for a whopping 8th consecutive time by 0.25%, bringing it to a total of 4.5%. In response, lender prime rate now sits at 6.7%. Although we knew that this was coming, following a not entirely subtle suggestion at December’s announcement that the hikes would continue (albeit somewhat slowly), this new increase leaves Canadians feeling rightfully exhausted and frustrated with the future of not only our economy but their own bottom lines.
So, what are the takeaways from today’s announcement? Well, if you hold a variable or adjustable rate mortgage then you likely already know, but let’s recap. If you have an adjustable rate (a variable rate with a fluctuating payment) then your payment is set to increase roughly $13 per each $100k you have left outstanding on your mortgage balance. If you have a variable rate (with a static payment) then it’s likely that today’s announcement will push you into trigger rate territory (if you haven’t reached it already).
We knew that the Bank was going to continue to aggressively target inflation with its rate which ostensibly the only real tool in its arsenal to do so. And, with December’s inflation report illustrating a fairly strong slow down of public enemy #1, it’s no surprise that while they did throw another increase our way, it was only a little baby one (compared to previous ones, at least).
Going forward, the jury is out on whether we will see more increases. It’s no secret by this point that much more upward rate pressure could be the straw that breaks the recession camel’s back, so it’s likely something that Mr. Macklem and his friends will try to avoid. At this point, only time will tell!
I know you are all getting sick of these increases, and please trust that so are we, your friendly neighbourhood Real Estate Professionals. But the best thing you can do for yourself is to review your mortgage, ensure your payments are doable for the long term, comb through your monthly household budget once again and see how you can create a safety net for yourself.
If you would like to set up a call with our highly trusted and experienced Mortgage Professional for an honest and no obligation review of your mortgage, please don’t hesitate to reach out to us.