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What you need to know ahead of the Bank of Canada announcement

The Bank of Canada’s next rate announcement is scheduled for April 13th and a 0.50% increase in the overnight rate (currently 0.50%) is becoming more probable. This change would increase Prime to 3.20%. Furthermore, there is heightened expectation for additional 0.50% rate increases throughout the year that could bring Prime into the mid 4’s by December.

How could an increase in bank prime impact your rate?

Example: 

If you have a $500,000 mortgage and your current variable rate is Prime – 0.90% (1.80%) with a monthly payment of $2,070.93.

If the overnight rate were to increase by 0.50%, prime will increase by 0.50% as well. This would increase your rate from 1.80% to 2.30%, and your payment (on an adjustable variable rate mortgage) will rise from approximately $2,070.93 to $2,168.29.

For every 0.25% increase to the prime rate, it will have a $12-$14 increase per $100,000 in mortgage funds.

To help keep you informed on the Bank of Canada announcements and other important economic information, here are some of Valko Financial’s top sources to follow:

BNN Bloomberg

Canadian Real Estate Association

Mortgage Professionals Canada

3 Reasons Canada Housing Will Still Stand Tall After Rate Hikes

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Tracy and her team are here to help. Apply online or contact us today and allow us to help you along your journey in life. We will always provide sound financial advice on the best options for your mortgage.