On October 26, 2022 the Bank of Canada increased interest rates yet again, bringing millions of people on variable mortgages potentially closer to their ‘trigger rate’. Our last series with Carina Demedeiros Mortgage Specialist was a hit, so we sat down with her once again to learn about ‘Trigger Rates’ and how these increases may affect those with variable mortgages.
Trigger Rates Explained
Trigger Rates have been in variable contracts for years, but this is one of the first times that they are actually being used. A mortgage hits a trigger rate when the amount you pay in interest outweighs your payments on the principal. If you are in a variable mortgage, you should contact your mortgage provider to see when this might affect your payments, if it hasn’t already.
If you’re currently looking at purchasing a new property and thinking about variable over fixed mortgage, take Carina’s advice. Sit down and make a family budget to see what you can afford (not what you are approved for- as those can be different things). If you do have funds available look at automatically increasing those payment so these interest rates won’t hit as hard.
Stay informed!
The Bank of Canada has indicated this increase wasn’t the last. I will be updating my clients about these increases on all my social channels. Follow along for all the industry updates, real estate tips and tricks, and of course new listings.
Any other questions about getting into the market?
Give me a shout!