*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[MillerTime GFG]

If anyone reading this is worried they won't be able to afford the increase in payments...

If you have an insured mortgage (you put less than 20% down), insurers are allowing households that are "in financial distress" to increase amortizations up to 35 and potentially even 40 years.

The process is as follows:
1. Contact your insurer to explain situation
2. If insurer approves, they will contact your lender on your behalf to increase amortization and reduce payments


- If you don't know who your insurer is (because who does really), feel free to PM me and I can find out on your behalf, free of charge. Just happy to help families that may be struggling.

[The Fisher Account]

As a 2019 5-yr variable rate holder:

2020 - it was the best of times
2022 - it was the worst of times

[MacDaddy77]

hoping for 2024 best of times!

[Locke]

Originally Posted by MacDaddy77

hoping for 2024 best of times!

I find your lack of pessimism disturbing.

[FlamesAddiction]

Someone was telling me that some mortgages that were locked in at lower rates for a while have fine print that says if interests reach a certain level, they are not longer fixed, and that a lot of people are going to be affected by this now. I have no idea if what I was told is accurate, but that would really suck for a lot of people.

[Shazam]

Originally Posted by The Fonz

Prime rate at most banks is already at 5.95%.

The BOC rate of 4.25% today is the benchmark/overnight rate, not prime.

Point being, pepper your angus.

[tvp2003]

Originally Posted by FlamesAddiction

Someone was telling me that some mortgages that were locked in at lower rates for a while have fine print that says if interests reach a certain level, they are not longer fixed, and that a lot of people are going to be affected by this now. I have no idea if what I was told is accurate, but that would really suck for a lot of people.

If you have a fixed rate mortgage it's fixed for the entire term.

I think what they were referring to is a variable mortgage -- and more specifically a variable rate mortgage or VRM, as opposed to an adjustable rate mortgage or ARM -- where your payment stays the same (even if interest rates rise), up to a certain point where your monthly payment no longer covers off the interest amount. Once you hit this "trigger rate", your payments start to increase as well just to keep up with the interest rate hikes.

[Weitz]

Little pricier today. But still a ton of runway of affordability.

My renewal is up Jan. 2024. Not super happy with that timeline but will be interesting to see how things are this time next year. Probably short term fixed is in my future.

[Izzle]

My renewal is up in April 2025. Still lots of time to go. But still thinking that short term fixed is the way to go.

[Fuzz]

It seems to me after the next 6 months or so we will probably see a high water mark for rates, so wouldn't anyone renewing from now on be better on variable? Or is there a real worry rates go up another percent or more?

[DoubleK]

Originally Posted by Weitz

Little pricier today. But still a ton of runway of affordability.

My renewal is up Jan. 2024. Not super happy with that timeline but will be interesting to see how things are this time next year. Probably short term fixed is in my future.

December 2023.

Likely going short term fixed as well, but on the other hand, lots can change in a year.

[Muta]

Try living on your own with a variable interest rate right now, who renewed on a variable in January 2022 for three years before #### hit the fan!

Fun times, fun times

[MillerTime GFG]

Variable "spreads" are still pretty good, around prime - 1.00% in many cases. I personally like either a variable rate, because rates will come down organically as the overnight rate comes down, or a short term fixed rate (1 or 2 years) so you can hopefully renew at a lower rate.

Downfall of short-term fixed rates however:
- Generally higher than 4 and 5-year fixed rates
- You're still "guessing" when rates will come down. What if you take a 1 year term, and rates haven't come down at the end of that term...then you're in the same spot

[Cowboy89]

Originally Posted by MillerTime GFG

Variable "spreads" are still pretty good, around prime - 1.00% in many cases. I personally like either a variable rate, because rates will come down organically as the overnight rate comes down, or a short term fixed rate (1 or 2 years) so you can hopefully renew at a lower rate.

Downfall of short-term fixed rates however:
- Generally higher than 4 and 5-year fixed rates
- You're still "guessing" when rates will come down. What if you take a 1 year term, and rates haven't come down at the end of that term...then you're in the same spot

Is there a commercially available option for retail banking / mortgage clients to buy a rate cap on a variable rate mortgage?

[MillerTime GFG]

Originally Posted by tvp2003

If you have a fixed rate mortgage it's fixed for the entire term.

I think what they were referring to is a variable mortgage -- and more specifically a variable rate mortgage or VRM, as opposed to an adjustable rate mortgage or ARM -- where your payment stays the same (even if interest rates rise), up to a certain point where your monthly payment no longer covers off the interest amount. Once you hit this "trigger rate", your payments start to increase as well just to keep up with the interest rate hikes.

Bang on...definitely referring to VRMs vs ARMs.

VRMs have static payments, that are set based on the rate at time of funding. So if net rate was 1.25% for example when prime was super low, then those payments may not be high enough to cover interest based on today's prime rate, so they have hit their "trigger rate". They will be forced to do a lump sum payment, or increase their monthly payments by a certain amount.

[MillerTime GFG]

Originally Posted by Cowboy89

Is there a commercially available option for retail banking / mortgage clients to buy a rate cap on a variable rate mortgage?

Not that I'm aware of. Not out of all the lenders within "the broker channel" at least.

[White Out 403]

of course, lets break the inflation over the backs of labour.

[FlamesAddiction]

Originally Posted by tvp2003

If you have a fixed rate mortgage it's fixed for the entire term.

I think what they were referring to is a variable mortgage -- and more specifically a variable rate mortgage or VRM, as opposed to an adjustable rate mortgage or ARM -- where your payment stays the same (even if interest rates rise), up to a certain point where your monthly payment no longer covers off the interest amount. Once you hit this "trigger rate", your payments start to increase as well just to keep up with the interest rate hikes.

Oh, ok that makes sense. I don't think the person explained it right, but he did say "trigger rate", so this must be what he meant.

[Snuffleupagus]

Times like this I'm glad I'm old and mortgage free, this is looking like 1979-81 all over again, I feel bad for the young family's.

[Yoho]

Originally Posted by Snuffleupagus

Times like this I'm glad I'm old and mortgage free, this is looking like 1979-81 all over again, I feel bad for the young family's.

I bet you wish you had 5-6% mortgage interest rates back then.