Bank of Canada Rate Increase
October 24, 2018 | Posted by: Natalie Wellings
By now you have likely heard that the Bank of Canada has increased the prime rate. This is the 5th increase since last summer. The prime rate has increased from 3.70% to 3.95%. When the prime rate increases I find that many consumers are left a little confused about how this affects them. The prime rate ONLY affects loans that have a variable rate. If your mortgage or vehicle loan has a fixed interest rate, this rate increase will have NO affect on you.
If you have a variable rate mortgage; a line of credit, or a variable rate loan then you will experience a payment increase.
You can currently obtain a 5-year insured variable mortgage for prime -1.00%. The rate has gone up from 2.70% to 2.95% as a result of the Bank of Canada announcement. This means a payment increase of $38.09/month on a $300,000 mortgage or $63.48/month on a $500,000 mortgage.
In historical terms, today’s rate is still very low. Here is something to give you some perspective!