Last week we saw the Bank of Canada raise the Key Rate by 0.25% and the Banks quickly raised Bank Prime lending rate to 2.75%. For those in a Variable rate mortgage, the question of whether to lock into a fixed rate is coming up again.
No surprise, the media has started the fear mongering and the so-called ‘Experts’ are suggesting that it’s time to lock into fixed rates, once again…. This article came out today and I’m not surprised that these ‘Experts’ have quickly jumped on the band wagon with talk of ‘rates hikes’ and ‘higher housing costs’ to get their name in lights… click here and judge for yourself.
The real question is ‘how much does the Bank of Canada need to raise the Key Rate to control inflation and economic growth?’ And earlier this year, we reported on Ben Tal’s, Senior Economist with CIBC, forecast that the Bank Prime only needs to increase by no more than 3.00%….and that this is the most it should increase… but it will take around 2 years or longer to get there… if they get there at all…. click here for the full report.
So why would anyone lock into a mortgage at over 4.00% today, when they could enjoy rates of just over 2.00% and slowly see their rates rise? If you know that answer, please share with me…
We all have different needs and there isn’t a ‘one size fits all mortgage’… seek professional, unbiased advice…get a strategy in place…. monitor the market and stay informed and you’ll always make the right decision.