The Prime Rate affecting Variable Rate Mortgages will likely not increase until September. The weak US Economy, the strong Canadian dollar and the effects of the government spending on economic growth in Canada all played a role in the May 31st decision to keep Prime Rate the same. Something they will probably do again for the July 19th meeting.
If we start to see economic growth start to increase in the next coming months, which is predicted to happen, rates will rise.
If the Bank of Canada waits too long to raise rates, potential inflation can could lead to an even steeper rate hike in the future. It is easier to digest a couple of small rate increases than 1 really big one. Therefore, it makes sense for rates to start rising in September.
Prime Rate will likely be about 0.75% higher by the end of the year.
If you have a variable rate mortgage and Prime Rate does change, your payment amount will change as well. The good news is; 71% of Canadians factored a potential mortgage payment hike into their monthly budget. See this article in the Financial Post for more the CMHC annual mortgage survey.
Talk to you existing mortgage lender or a mortgage professional for more information or if you have any questions.
Martene Woodward
Mortgage Associate, Argentum Mortgages
P: 866-932-8412
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