The Bank of Canada surprised everyone yesterday by raising its interest rate by 100 basis points to the current 2.5%. Consumer wallets will be affected in many ways in the coming months. First, those who own property will see that the cost of money sometimes increases rapidly. If you have a variable interest rate, you may want to switch to a fixed interest rate. And those who rent their car will taste it too.
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When will your rate go up?
If you already have a fixed price, you can jump straight to the next question. For the others, you still have a mortgage payment at your current rate, which is June 1stah August. Because every time the Bank of Canada raises its interest rate, it takes four weeks for the new interest rate to take effect, explains mortgage broker Luigi Iafrancesco of the National Bank.
Which products are affected?
It’s not just your house, condo, or Plex that’s going to cost you more soon. Your car is in the same boat, especially if you lease it for 48 or 60 months. We’ve seen many rates of 2% or 3% in recent years, but the new ones are much more pronounced: we’re talking 8% or 9% for standard petrol vehicles.
What to do?
Fixed rate or variable rate, that is the big question of the day. Yesterday, the Royal Bank informed its customers that its key interest rate will rise from 3.70% to 4.70% today. It’s worth considering for the National Mortgage Broker if fixed rates don’t go above 5%. “But at 6% it might not be worth taking a fixed rate, at least not yet,” advises Luigi Iafrancesco.
Could you lose your house?
six months This is often the time between failure and bank takeover. “It starts with a reminder from the bank, which has a period of 30 days. After that, it is a communication of the exercise of a mortgage right,” summarizes Pierre Fortin, President of Jean Fortin and Associates. At the moment, however, nothing heralds a recovery wave. 60-day notice periods are down 5%, according to iTerram, and trade-in sales are actually down 37% over the past year, according to the Association professionnelle des courtiers immobiliers du Quebec.