The Bank of Canada recently announced its decision to hold the policy interest rate steady at 2.25%. While that brings short-term consistency, the messaging behind the announcement carried an important message that we simply can’t ignore which is: upside risks to inflation have increased.
Between shifting energy prices, global market pressures, and rising government bond yields, the overall tone from economic analysts has changed. Rather than waiting for further rate drops, markets are now preparing for potential rate increases down the road.
Here is a simple look at what this environment means for your mortgage and how you can comfortably prepare for what comes next.
- Variable-Rate & HELOC Holders
While your current payment hasn’t jumped today, assuming the Banks rate won’t change or decrease, is no longer a reliable strategy.We highly recommend, to take a look at your household budget and ask: Could my monthly cash flow handle a 0.75% to 1.00% increase over the next year if Prime increases?Today’s fixed rates are sitting higher than variable options (often mid-4% vs. mid-to-high 3%). Choosing to lock into a fixed rate today means accepting a higher payment right now in exchange for potential long-term predictability.
- Pre-Approved Home Buyers
Fixed rates are driven by government bond yields, which have been climbing. Holding an active pre-approval rate hold is a massive asset right now. It essentially acts as a price freeze which not only protects your budget, but also keeps your pre-approval purchasing power in tact.
If you have a pre-approval rate hold in place, check your rate hold expiry date. Finalizing your home search and taking possession of the property before your pre-approval rate expires is key. - Homeowners Renewing Soon
At renewal you have 3 options1. Renew with your existing lender.
2. Switch to a new lender for better rates
3. Refinance- to add a secured line of credit (HELOC), debt consolidate, or to make changes to better improve cash flow.
Refinancing and Switches do take time to process (anywhere between 2-6 weeks) and rates can be locked in 120 days in advance. Don’t wait until days before your maturity date. Call us today to start looking at your options 4 months before your renewal date.
Every Household is Unique
There is no “one-size-fits-all” answer when it comes to choosing between a fixed or variable mortgage. Because unforeseen economic shifts and crises can alter rate expectations overnight, our goal is not to cause any anxiety or concern, but instead to share these updates so you have the insights you need to feel prepared and empowered.
If you have a variable rate and are considering “locking in” to a fixed rate:
- Check Your Lock-In Rate: If you hold a variable mortgage, call your current lender to ask what fixed rate they can offer you today. (Tip: Double-check the term length and remaining amortization they use to calculate that payment!)
- Run a Comparison: Download our *mortgage app to run side-by-side numbers comparing your current payment against a potential fixed rate.
*Each broker has her own app- click here and choose your broker, then download an Mortgage App on either of their contact pages. - Get an Unbiased Perspective: If you receive a renewal offer or a lock-in quote and want a thoughtful 3rd-party opinion, book a quick chat with a Mortgage Sister. We are always happy to help you weigh the pros and cons for your personal goals.
If you are looking to purchase your first home, upsize or downsize- book a call with us today!
