The Bank of Canada’s next rate announcement is scheduled for April 13th and a 0.50% increase in the overnight rate (currently 0.50%) is becoming more probable. This change would increase Prime to 3.20%. Furthermore, there is heightened expectation for additional 0.50% rate increases throughout the year that could bring Prime into the mid 4’s by December.
How could an increase in bank prime impact your rate?
If you have a $500,000 mortgage and your current variable rate is Prime – 0.90% (1.80%) with a monthly payment of $2,070.93.
If the overnight rate were to increase by 0.50%, prime will increase by 0.50% as well. This would increase your rate from 1.80% to 2.30%, and your payment (on an adjustable variable rate mortgage) will rise from approximately $2,070.93 to $2,168.29.
For every 0.25% increase to the prime rate, it will have a $12-$14 increase per $100,000 in mortgage funds.
To help keep you informed on the Bank of Canada announcements and other important economic information, here are some of Valko Financial’s top sources to follow: