First of all, a very merry Christmas…and all the best for 2023.
This has been a tough year with severe rate hikes for those of you in a variable or adjustable rate mortgage. Rate hikes are the only tool the Bank of Canada has to bring inflation down to its 2% target rate. Today the inflation rate is still around 7%. The Governor has indicated that he will continue on this path until the rate is in line.
What does this mean?
It could mean more hikes next year. While I believe eventually, the rate will come down, that does not help in the short term.
Here are some possible solutions.
- You can switch to an optional payment mortgage. This doesn’t mean you don’t have to make payments, but you can pay as little as just interest (about a 20% discount on your current payments), or you can pay any additional amount if you have the spare cash, and you can change the amounts monthly to better fit your budget.
- Some lenders today are offering 4.99% for a five-year fixed rate. This is lower than most of the variable rates today and would be much lower if there were more hikes.
If locking into a rate for the next five years interests you, there are two things you should do.
First, call the institution that holds your mortgage and requests their best lock-in rate. If it is not where you think it should be, there is option 2, call me.
Of course, I am always available to chat by Text, Email or Phone, so if you have any questions, please reach out.