It looks like the Canadian Government has raised it’s key interest rate by 0.25%. The Prime rate is now 2.95%. What does this mean for you? and how does this affect the market.
The reality is the prime rate is still extremely low and we have to remember it has been at or below 3% for over 9 years now. We predict it will stay there for some time. With the price of oil at all time lows and the dollar going up this is not good for Canada. Add on top of that super low inflation, they could have justified lowering the prime rate. Thus, we would not be surprised if the prime rate came back down in the fall or early 2018.
So what does this mean for you? A prime rate increase only affects those clients who currently have a variable rate mortgage or variable line of credit. The increase of 0.25% means a monthly payment increase of approximately $12 per $100,000…that’s not a lot – let’s be realistic about this impact.
The media will make a huge deal about this and claim that it will have a huge impact on housing and home prices. We still see home prices climbing 10% annually for the next 3 yrs on freehold homes and condos in the 6 to 8% range.
Some will panic and sell for less than their house is worth. Those buyers out there that have been waiting – seize the moment and buy something for a great price.
Those who act in times like these benefit, those who sell or panic do not.
Always talk with a Professional and experienced Mortgage Broker about your mortgage financing options and have a plan. When you have a plan, you are prepared.