Canadian Prime Rate is now 5.95% – Mortgage Rate Analysis to End of 2022
Bank of Canada increased benchmark interest rate to 3.75%
Today, the Bank of Canada increased its overnight benchmark interest rate 50 basis point to 3.75% from 3.25% in September. This is the sixth time this year that the Bank has tightened money supply to quell inflation, so far with limited results.
Trigger Point for Canadian Variable Rate Mortgages Explained, with Example
A detailed explanation of Canadian mortgage trigger point and how to handle it.
WHAT’S REALLY BEHIND A CREDIT SCORE? Revealing the components of the calculations
Credit scores typically range between 300 and 850 points and provide an indication of a borrower’s capacity r to repay their loans. There are two main credit bureaus in Canada – Equifax and TransUnion – that collect, store, and share information about how you use credit.
WHY ARE DEBT SERVICING RATIOS IMPORTANT WHEN APPLYING FOR A MORTGAGE?
HOW ARE DEBT SERVICING RATIOS CALCULATED?
There are two ratios you need to worry about—gross debt servicing (GDS) and total debt servicing (TDS)
Gross debt servicing (GDS)
This is the maximum amount you can afford for shelter costs each month. It’s your monthly housing costs divided by your monthly income.
Mortgage Tips for Canadian Buyers
Buying a home should be exciting – not exhausting.
Mortgage Checklist
1. Determine your Budget
Determine what your monthly budget is for the following:
– Mortgage payment
– Property taxes and Condo fees (if applicable)
– Utilities, maintenance and repair
How sudden job loss affects your mortgage pre-approval or approval
If you’ve been thinking about buying a house, you’ve probably considered how much you can afford in mortgage payments. Have you also thought about what would happen if you lost your source of income?
Data on July 1, 2022 Prime Increase to 3.7%
Today, the Bank of Canada showed once again that it is seriously concerned about inflation by raising its overnight benchmark rate to 1.50% – making Consumer Prime 3.70%
This latest 50 basis point increase follows a similar-sized move in April and is considered the fastest rate hike cycle in over two decades.
Everyone STAY COOL!
Says Mortgage Mark Herman, top Calgary Alberta Mortgage Broker.
Rates Increasing: How Much? & How Fast?
With interest rates now on the rise, 2 Questions: How much? & How fast?
Summary:
- Rates are up by 1.45% on the Variable already (Prime was 1.75% and is now 3.2%)
- There HAS BEEN a 1 x .25% increase and 1 x .5% increase so far = .75% so far
- so expect Prime to get to 3.95% from 3.20% today, April 25th.
- Insured variable rates are at Prime – 0.95% = 3.2 – .95% = 2.25% today
- and they are expected to increase to 3.95% – .95% = 3.00% and then hold and decrease in the Fall of 2022.
- these rates are lower than the current 5-year fixed rates of about 4% and are expected to come down in the Fall, 2022.
DETAILS:
Traditionally the Bank of Canada has used 0.25% as the standard increment for any interest rate move up, or down. Occasionally the Bank will move its trendsetting Policy Rate by .50%, as it did at its last setting on April 13.
Investment Mortgages WILL Be Harder to Get in 2023!
Its true! This thing called Basel 3 will make it harder to get an investment mortgage in 2023!
Lots of junk below, the short version is:
Canadian banks will need to apply more risk to investor mortgages and to lower that risk they may:
- Increase the down payment needed from 20% to a higher amount … maybe 25% or 30%
- Lend to fewer investors – which already make up 25% to 30% of the Canadian market.
- New Zealand already started 40% down payment for investment properties!
“Avoid the new rules by buying your investment property in 2022!
Mortgage Mark Herman, top Calgary, Alberta mortgage broker.”