To everyone’s surprise, the Bank of Canada has increased their Overnight Rate by 0.25%.
What does this mean:
Keep an eye out later today for further updates on your specific lenders’ prime rate.
Recent economic data has been stronger than expected hence a surprise to see the Bank increase their rate again so quickly. We haven’t seen that in over 10 years! You have to admit that we have had it good for a long time and we can still continue to benefit from low rates - don’t panic!
We have seen two increases in the last three months, and even though it is only 0.25%, this second increase may start to impact our monthly budgeting and cash flow.
Fixed term interest rates are still super low with five-year fixed rates in the 2.99% to 3.24% range. If the net interest rate on your current variable is the same as or higher than the current fixed term rates right now, even though the prime rate will still remain low for a while, it might be time to chat about options including potentially converting to a fixed term.
In saying that, converting to a fixed term isn’t right for everyone as other factors are to be taken into consideration such as payment change, income and future plans (renovating, moving, etc.)
Contact me so I can calculate what your new payment would look like.
Create a Plan:
Have we really made the most of the low payments we have had? How much have we saved up or how closer are we to the end of our mortgage because we have made extra payments on our mortgage? Or maybe we have some high interest credit card debt that we can’t seem to pay off in full each month.
Don’t worry, if you aren’t as far ahead as you would like to be, we can work together to create a plan to get you back on track… so back to school isn’t just for the kids…us adults can benefit from going to back to the drawing board with our finances, savings and future financial wealth goals.
Don’t hesitate to contact me to discuss! It’s better to make an informed decision and take action than to let things slip too far. If you hear of a friend or family member going through a financially tough time – I may be able to help with some budgeting, credit counselling and debt consolidation options. I’m here to help you as best I can.
I’ll be in touch again for the next announcement on October 25, 2017.
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