The Bank of Canada raised its policy rate by 0.25 percentage points today, bringing it to 2.50%. If you have a mortgage or a line of credit, you may be wondering how the decision will affect you.
If you have a variable-rate mortgage, your rate will rise if your lender increases its prime rate. Depending on how your mortgage is set up, that could mean a higher regular payment. If you have a fixed-payment variable-rate mortgage, your payment may initially stay the same, with more going toward interest and less toward principal. If your mortgage reaches its trigger rate, however, your lender may require you to increase your payment.
Interest rates on home equity lines of credit (HELOCs) and other lines of credit tied to prime will also rise when lenders increase their prime rates.
If you have a fixed-rate mortgage, your rate and payment won’t change during your current term. Rates offered on new fixed mortgages can still move, although they don’t automatically follow changes to the Bank’s policy rate.
I know a rate increase can raise questions, especially if you’re planning to renew or make a move. If you’d like to talk through your situation and what options may be available, please reach out. I’m happy to help.
The Bank of Canada raises its policy rate: What it means for you
