Bank of Canada Announcement | March 2nd
The Bank of Canada met on March 2nd, 2022 and announced an increase of 25 basis points to Bank Prime bringing it up to 0.5%.
Bank of Canada Announcement Recap
Unfortunately with everything happening between Russia and the Ukraine, we have an incredible amount of new uncertainty which now, more than ever is evident in the volatility of the market. At the same time, economic growth in Canada has actually been really strong and inflation remains a hot topic.
Inflation in Canada is presently sitting at 5.1% - although high, we are still sitting much lower than the United States who is currently sitting at 7.1%.
What does this mean for variable rate clients?
Let's loop back on our original strategy when deciding to go variable. Ultimately, we knew at some point, the Bank of Canada was going to increase rates. It wasn't a conversation of if, but more so by how much and how soon.
A lot of our clients decided to increase their payments and set it as if they decided to go with the fixed rate.
If you were someone that chose a variable rate and increased their payment, you are not going to notice a difference in payments.
What does this mean for my payment if I have a variable rate?
Essentially, every $100,000 in mortgaging would increase your payment by $12.00
This means, if you have a $500,000 mortgage, your new payment would increase by (approximately) $60.00.
However, it's still important to note that despite the recent increase, a small quarter point increase will have minimal impact on your payments.
Should you have any questions or simply want to chat through your options, don't hesitate to reach out.