Canadian interest rates have been on a steady climb over the past six months and we are starting to see the effects on the housing market. Understandably, many Canadians want to know what this means for their mortgage.
How do higher interest rates affect my mortgage?
Lucky for you, if you have a fixed rate mortgage, you will not be affected until you need to renew your mortgage. However, if you have a variable rate mortgage, you will see your payments go up immediately, and more of your payment will go toward interest rather than principal. If you are thinking about switching to a fixed rate because of rising rates you may be onto something but do keep in mind that you will still be paying less on your variable rate mortgage for the foreseeable future.
One of the biggest questions to ask right now is if interest rates are going to continue to climb, or if they will level over the next year. If the consumer prime rate goes up again as anticipated it may be as high as 3.70% or more which may put some people awfully close to the breaking point. Obviously a lot can happen between now and the end of 2022 but we should anticipate further interest rate hikes.
If you live in Lethbridge and need a good mortgage broker to answer questions about your current mortgage, interest rate, or to get pre-approved as a first-time home buyer, contact Chris Marriner any time at 403-894-8836 and let’s have a sit down to discuss your options.