Bank of Canada Hikes Interest Rates Again, Mortgage Costs on the Rise
The Bank of Canada announced another interest rate increase today, increasing the overnight rate by 0.25 basis points in a move that mostly surprised markets. Although I mentioned the strong possibility of it last week.
The move may also come as a surprise to many homeowners or potential buyers as borrowing costs are on the upswing. Not good news for Canadians who have now secured a record number of loans against Canadian Real Estate, up 11% this year alone.
Many of the big banks today also increased their prime rate from 2.95% to 3.2%. So If you’re carrying a variable rate mortgage expect to be paying an extra 0.25 basis points moving forward.
5 Year Fixed Mortgage Costs are also trending up, with Scotia Bank increasing their rate today to 3.29%, while BMO increased theirs to 3.19% just last week.
If you want to get a better sense of where the fixed term mortgage rates are going then watch the 5 year Canadian Government bond yield which has now jumped 82% (+75bps) in the past 90 days.
Of course this also means your HELOC will interest payments will increase by 0.25 basis points. Worth noting, since Canadians owed $211 billion on 3 million home equity lines of credit last year.
Although these increase are small, it will slowly chip away at overall buying power moving forward. One would imagine prices should eventually begin to reflect that.
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