Interview With A Mortgage Broker - Rising Interest Rates

Melanie: Stephanie, can you give us a little insight on the announcement that the bank of Canada made this morning and what this means? If you are in a fixed rate mortgage versus a variable rate mortgage? 

Stephaine: Absolutely like you said, this is the second announcement in a row where the bank of Canada has increased their rates by 50 basis points. So what that means for anybody in a variable rate mortgage, if you have a line of credit, the prime rate is no longer 3.2%. It has gone up to 3.7%. So that's what it means for those of you in a variable rate mortgage. If you are any fixed rate mortgage, nothing will change. Your payments are the same, so no need to panic.

Melanie: Okay. And if you are in a variable rate mortgage, you mentioned your payments will increase. What kind of increase are we looking at? 

Stephanie: So for every  hundred thousand dollars, if you are in a variable rate mortgage or an adjustable rate mortgage, you're going to see an increase in your payments for between $24 to $25 a month for every hundred thousand dollars. That's for a 25 year amortizing. 

You have a higher amortization like 30 years. For example, you may see something closer to $26 of an increase every month. So not a huge increase and double-check your paperwork, make sure that you have a variable rate mortgage versus an adjustable rate variable rate.

Your payments will not change adjustable rate. 

You can expect an increase in your payments if the rates go up. 

Melanie: What does this mean for buyers who are looking to get pre-approved for a mortgage? 

Stephanie: I mean, don't let this scare you, anybody that wants to buy and get into the market, always make sure that you are pre-approved, whether it's for a variable rate or fixed.

☎️Contact me, contact your bank or your mortgage agent broker, whatever the case may be, contact someone and lock in that rate because we can lock in a rate for up to 120 days.

So make sure you're always pre-approved, but do not let these rates scare you from the market. If you're wanting to be in the market long-term and home, you know, owning a home is your goal.

➡️ At the end of the day, do not let these rates scare you. 

✅ It's still the best investment you can. 

Melanie: Thank you so much, Stephanie, for taking the time to, you know, answer these questions and let us know a little bit about what this announcement means for the market and for buyers out there.

Stephanie: I would always say just to keep in mind, like I've mentioned before, I am a huge variable rate advocate. 

So if you are looking to get a variable rate, you can qualify at the lower stress test. If you are looking to lock into a fixed rate, we just may have to qualify you a little bit higher.

So it may restrict your buying power, but again, you need to do what feels comfortable, and with the consistency of your payments. 

But we can definitely go into that. 

Melanie: Perfect. All right. Well, if you're looking, you know, for some mortgage advice, feel free to reach out to Stephanie. ☎️Thanks again for joining me today on this call.