Kitsilano Mortgage Update – September, 2017

One of our Mortgage Brokers, Tom Prasol of 4Front Mortgages, gave us an update on the Mortgage World after another interest rate increase was announced today.

From Tom:

The Bank of Canada has raised interest rates for the second time in less than two months. The central bank’s benchmark rate was raised twice by 0.25% since July and now stands at 1.00%. For consumers, this means the Prime Rate now stands at 3.20%. It was as low as 2.70% just a few months ago.

The rate increase works out to an extra $13 per $100,000 borrowed per month.

Not only does this make mortgages a little more expensive than they were, but many Buyers may now be faced with a little more pressure to purchase a home if they have a rate locked in for the next few months.

There has also been a recent proposal suggesting Buyers with 20% down or more will have to pass the “stress test” and qualify at the benchmark rate, which is typical much higher than the rate they’ll end up paying on a monthly basis. This is to ensure Buyers can afford another interest rate hike. This policy is already in place for Buyers with less than 20% down, and can lead to 20% less affordability for Buyers.

Given this changing environment, it’s more important now than ever to chat with a qualified mortgage broker, and Tom is a fantastic choice. He’s on top of new policies, creative and very helpful. If you’re interested in chatting with him, send him an email to get started: [email protected].