On October 24, 2018 the Bank of Canada increased the overnight lending rate by 0.25% to 1.75%.  This caused consumer banks and mortgage companies to raise their consumer prime lending rates by 0.25% as well, passing the increase on to consumers.

An increase in prime will immediately affect you if you have a “variable” or “adjustable” rate mortgage, or a Line of Credit with a debt balance.

If you have one of these products, you will receive a notice from your lender about the rate change and your new payment amount moving forward.

The next Bank of Canada rate announcement is scheduled for December 5, 2018.  More Bank of Canada News

Our Perspective and outlook on rates

Based on current economic forecasts, we expect to see a couple more Prime rate increases over the next 12-18 months as the Bank of Canada continues to slowly raise its overnight lending rate to control inflation.
While fixed mortgage rates are not directly affected by the Bank of Canada interest decisions, they are determined by many of the same underlying factors (essentially the health of the Canadian and US economies). Therefore, for the same reason that we expect to see Prime slowly going up over the next 18 months, we expect that fixed rates will gradually be increasing as well.
If you have a variable rate mortgage and are considering locking into a fixed rate option for security, please give us a call first to discuss. It might make sense to do this, but sometimes you can get a better rate by switching to a different lender offering a more competitive fixed rate than the one you will get from your current lender.
Also, if your current mortgage is renewing in 2019 it might be worthwhile to look into an early renewal.  We can help calculate the numbers to compare the cost of paying a penalty for early cancellation against the gains in securing a lower interest rate for your next 5 years (compared to waiting until your renewal date and getting a higher rate for your next term).

The following mortgage rate chart represents our current mortgage rates.

Prime Lending Rate: 3.95%

Institution 1 Y 2 Y 3 Y 4 Y 5 Y Var.
MG&A Rates 3.19% 3.19% 3.29% 3.69% 3.44% 2.85%
Typical Posted Rates 3.79% 3.79% 4.44% 4.59% 5.44% 4.25%

If you have any questions about your mortgage we are always more than happy to help.  You can reach out to us or book your own appointment through our website.