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Trade policy may seem far removed from real estate, but when it comes to tariffs, the ripple effects can impact everything from mortgage rates to home affordability. CIBC highlights four key reasons why President Trump might limit new tariffs, and each of them ties back to the broader economy—including housing.<h3>1. Stock Market Reactions&nbsp;</h3>Trump closely watches the stock market, often using it as a measure of his success. When markets reacted negatively to previous tariff announcements, his administration quickly granted temporary exemptions (like Canada and Mexico’s 30-day reprieve on steel and aluminum tariffs). If new tariffs cause another selloff, he may soften his stance to stabilize investor confidence.<h3>2. Rising Gas Prices</h3>Tariffs on Canadian energy imports would likely push up gas prices—something Trump would want to avoid. Unlike other goods, there’s no quick alternative to Canadian oil, meaning higher costs would hit consumers immediately. More expensive fuel increases transportation and construction costs, which could lead to rising home prices.<h3>3. Inflation Pressures</h3>Broadly applied tariffs mean higher prices on imported goods, driving up inflation. Since Trump often criticizes inflation in campaign speeches, he’ll be hesitant to introduce policies that make it worse. Higher inflation could also push the Federal Reserve to keep interest rates elevated—bad news for mortgage borrowers hoping for lower payments.<h3>4. Timing &amp; Political Risk&nbsp; </h3>The negative effects of tariffs—rising prices, job losses, and economic uncertainty—would be felt quickly, while any benefits (such as bringing manufacturing jobs back) take much longer to materialize. With elections on the horizon, Trump may avoid policies that create immediate financial pain for voters.<h3>What This Means for Mortgage Rates &amp; Housing&nbsp;</h3>If new tariffs push inflation higher, the Bank of Canada and the Federal Reserve may be forced to keep rates elevated, making borrowing more expensive. But doesn't necessarioy mean you can take advantage of negotiating the price of your new home or real estate investment.👉 Thinking about buying, refinancing, or investing? Let's connect: <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener" data-mce-selected="inline-boundary">www.MortgageCall.ca</a>

Will Trump Hold Back on Tariffs? What It Means for Mortgage Rates & Real Estate

<h2>Understanding the Basics of Mortgages</h2>For many Canadian homebuyers, the journey to owning a home is often clouded by misconceptions about mortgages. These myths can lead to unnecessary confusion and stress. Understanding the basics can help demystify the process and empower you to make informed decisions.<figure id="figure-wjrdu4zs49m68c1sxa"><img id="wjrdu4zs49m68c1sxa" src="https://media.gettyimages.com/id/471832336/photo/canadian-land-value.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=l8Br4wWOQFhIAwylsI97rFS8CQPAKNSxdg44x0NaS-E=" alt="canadian mortgage" class="object-cover bg-gray-100" style="aspect-ratio: 16/9;" data-mce-src="https://media.gettyimages.com/id/471832336/photo/canadian-land-value.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=l8Br4wWOQFhIAwylsI97rFS8CQPAKNSxdg44x0NaS-E=" data-mce-style="aspect-ratio: 16/9;"></figure><h3>Myth 1: You Need a 20% Down Payment</h3>One of the most persistent myths is that you must have a 20% down payment to purchase a home. While a larger down payment can reduce your mortgage insurance costs and monthly payments, it's not a requirement for everyone. In Canada, first-time homebuyers can put down as little as 5% for properties under $500,000. For homes priced between $500,000 and $999,999, a minimum of 5% is required on the first $500,000 and 10% on the remainder.There are also programs and incentives designed to help first-time buyers, such as the First-Time Home Buyer Incentive, which can further reduce the required initial investment.<h3>Myth 2: Your Credit Score Must Be Perfect</h3>While having a good credit score can certainly help secure favorable mortgage terms, it doesn't have to be perfect. Lenders in Canada consider a range of factors when assessing mortgage applications, including income stability and debt load. A credit score of around 680 or higher is generally considered strong, but even if your score is lower, you still have options.<figure id="figure-jsmlcxe9quim68c1sxa"><img id="jsmlcxe9quim68c1sxa" src="https://media.gettyimages.com/id/1347973666/photo/smart-phone-showing-credit-score-on-a-screen.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=oQVkHT28OYFWa2DKrLm5JNOpRUzNGFv1anrPJVR5ISc=" alt="credit score" class="object-cover bg-gray-100" style="aspect-ratio: 16/9;" data-mce-src="https://media.gettyimages.com/id/1347973666/photo/smart-phone-showing-credit-score-on-a-screen.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=oQVkHT28OYFWa2DKrLm5JNOpRUzNGFv1anrPJVR5ISc=" data-mce-style="aspect-ratio: 16/9;"></figure>It's important to shop around and consult with different lenders or mortgage brokers who can offer solutions tailored to your financial situation.<h3>Myth 3: Fixed-Rate Mortgages Are Always Better</h3>Many homebuyers believe that fixed-rate mortgages are the best option because they offer predictable payments. However, variable-rate mortgages can sometimes offer lower interest rates and potential savings over time. The choice between fixed and variable rates should depend on your financial stability, market conditions, and personal preference.Consulting with a mortgage broker can help you weigh the pros and cons of each option based on your unique circumstances.<figure id="figure-dpa0dq8jem68c1sxa"><img id="dpa0dq8jem68c1sxa" src="https://media.gettyimages.com/id/1271357237/photo/home-finance.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=dzpHFgUkRV0zTtBWHY1-0FIbOyeFm7MWMYMdy3mUzTU=" alt="mortgage options" class="object-cover bg-gray-100" style="aspect-ratio: 16/9;" data-mce-src="https://media.gettyimages.com/id/1271357237/photo/home-finance.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=dzpHFgUkRV0zTtBWHY1-0FIbOyeFm7MWMYMdy3mUzTU=" data-mce-style="aspect-ratio: 16/9;"></figure><h3>Myth 4: Pre-Approval Guarantees Your Mortgage</h3>Obtaining pre-approval for a mortgage gives you an idea of how much you can afford, but it's not a guarantee that you will receive the loan. Pre-approval is based on the information provided at the time, and any significant changes to your financial situation could affect your final approval.<ul><li>Maintain stable employment.</li><li>Avoid taking on new debt.</li><li>Keep your credit score steady.</li></ul>These steps can help ensure that your final mortgage approval aligns with your pre-approval conditions.<h3>Myth 5: Paying Off Your Mortgage Early Will Always Save Money</h3>While paying off your mortgage early can save on interest costs, it may not always be the best financial decision. Some mortgages in Canada come with prepayment penalties that could offset any potential savings. Additionally, overpaying on your mortgage means less liquidity for other investments or emergencies.<figure id="figure-74f9feqqnm68c1sxa"><img id="74f9feqqnm68c1sxa" src="https://media.gettyimages.com/id/869595964/photo/digitizing-the-budgeting-process.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=YBAUprWj4xrLCdj3M_lsX3AUJU1l6CkbCyKutatQ__A=" alt="financial planning" class="object-cover bg-gray-100" style="aspect-ratio: 16/9;" data-mce-src="https://media.gettyimages.com/id/869595964/photo/digitizing-the-budgeting-process.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=YBAUprWj4xrLCdj3M_lsX3AUJU1l6CkbCyKutatQ__A=" data-mce-style="aspect-ratio: 16/9;"></figure>Consider consulting with a financial advisor to evaluate if early repayment aligns with your broader financial goals and strategies.<h2>Informed Decisions Lead to Better Outcomes</h2>Debunking these common mortgage myths is crucial for Canadian homebuyers aiming to make informed decisions. By understanding the realities of mortgage financing, you can better navigate the home-buying process with confidence. Stay informed, seek professional advice when needed, and take control of your homeownership journey.Ready to chat? <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" data-mce-selected="inline-boundary">Book a Call Here</a>

Debunking Common Mortgage Myths for Canadian Homebuyers

<h3>Fixed Rate Mortgage vs. Variable Rate Mortgage: Which One is Right for You?</h3>When choosing a mortgage, one of the biggest decisions you’ll face is whether to go with a Fixed Rate Mortgage or a Variable Rate Mortgage. Each option has its benefits and risks, and understanding the differences can help you make a confident decision. Let’s break them down.What is a Fixed Rate Mortgage? A Fixed Rate Mortgage locks in your interest rate for a set term (e.g., 1 year, 3 years, 5 years, or even 10 years). This means your mortgage rate stays the same throughout the term, giving you stability and predictable monthly payments.What is a Variable Rate Mortgage? A Variable Rate Mortgage has an interest rate that fluctuates based on the lender’s Prime Rate. Your lender may offer you a rate such as Prime - 0.50%, meaning if the Prime Rate is 5%, your actual mortgage rate would be 4.50%.Since the Prime Rate can go up or down, so will your mortgage rate—and possibly your mortgage payments.How Does the Prime Rate Affect a Variable Rate Mortgage? When the Bank of Canada changes its Overnight Lending Rate, lenders typically adjust their Prime Rate accordingly. If the Prime Rate rises, your variable mortgage rate and payments may also increase. Conversely, if the Prime Rate decreases, your mortgage payments could go down.For example: If the Prime Rate is 5% and your lender offers Prime - 0.25%, your rate is 4.75%. If the Prime Rate rises to 5.5%, your rate increases to 5.25%, resulting in higher mortgage payments. If the Prime Rate decreases, you’ll enjoy lower payments. How Often Does the Prime Rate Change? The Bank of Canada typically holds eight announcement dates per year where they may choose to increase, decrease, or maintain the Overnight Lending Rate. These announcements are important to monitor if you have a Variable Rate Mortgage.On Jan 29th, 2025 the Bank of Canada has cut its overnight key interest rate by 25 bps to 3.00%.&nbsp;<h3>What influences Fixed and Variable Rate?</h3>Fixed-rate mortgage rates in Canada are priced off of Government of Canada 5-year bond yields that are, in turn, influenced by the U.S. Treasuries. Variable-rate mortgages are affected by the Bank of Canada's monetary policy, namely interest rate hikes and cuts that, in turn, impacts commercial banks' Prime lending rate.Understanding the Prime Rate in Canada: The Prime Rate is the interest rate that major banks in Canada use to set interest rates for variable loans/mortgages and lines of credit. It’s influenced by the Bank of Canada’s Overnight Rate, which is the rate at which banks borrow and lend to each other overnight.&nbsp;Consider the prime rate as the foundation upon which these other interest rates are built. As the prime rate in Canada fluctuates, the interest rate you pay on your adjustable/variable rate mortgage also adjusts accordingly.If you are like me, and you like to look at numbers, here is a table summarizing the Prime Rate changes in Canada from 2010 to today. This table captures the key changes in the prime rate along with the dates and the magnitude of changes from 2010 to today.<table border="1" style="border-collapse: collapse; width: 100%; float: left;" data-mce-style="border-collapse: collapse; width: 100%; float: left;" data-mce-selected="1"><tbody><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">Effective Date</td><th style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">Prime Rate</th><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">Change</td></tr><tr><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">Upcoming: March 12th</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;"> </td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;"> </td></tr><tr><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">Jan 29th, 2025</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">5.20%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.25%</td></tr><tr><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">Dec 11th, 2024</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">5.45%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">October 23, 2024</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">5.95%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">Sept 4, 2024</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">6.45%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.25%</td></tr><tr><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">July 24, 2024</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">6.70%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">June 5, 2024</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">6.95%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">July 12, 2023</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">7.20%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">June 8, 2023</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">6.95%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">January 25, 2023</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">6.70%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">December 8, 2022</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">6.45%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">October 27, 2022</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">5.95%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">September 8, 2022</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">5.45%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.75%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">July 14, 2022</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">4.70%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+1.00%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">June 2, 2022</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.70%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">April 14, 2022</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.20%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">March 3, 2022</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.70%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">March 30, 2020</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.45%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">March 17, 2020</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.95%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">March 5, 2020</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.45%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">October 25, 2018</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.95%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">July 12, 2018</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.70%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">January 18, 2018</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.45%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">September 7, 2017</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.20%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">July 13, 2017</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.95%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">July 16, 2015</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.70%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.15%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">January 28, 2015</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.85%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">-0.15%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">September 9, 2010</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">3.00%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">July 21, 2010</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.75%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;" data-mce-style="border-color: #000000;"><td style="width: 40px; border-color: #000000;" data-mce-style="width: 40px; border-color: #000000;">June 2, 2010</td><td style="width: 25%; border-color: #000000;" data-mce-style="width: 25%; border-color: #000000;">2.50%</td><td style="width: 20px; border-color: #000000;" data-mce-style="width: 20px; border-color: #000000;">+0.25%</td></tr></tbody></table> <h3>Pros and Cons of Each Mortgage Type </h3>Benefits of a Fixed Rate Mortgage: - Predictability: Your interest rate and payments remain the same until renewal. - Stability: Ideal for those who prefer budgeting with certainty. - Peace of Mind: No need to worry about rate fluctuations affecting your payments. Benefits of a Variable Rate Mortgage: - Potential Savings: If the Prime Rate continues to go down, you can save on interest costs. - Flexibility: You may be able to lock into a fixed rate later if needed. Switching from Variable to Fixed Rate If you start with a Variable Rate Mortgage but become concerned about rising rates, many lenders allow you to convert to a Fixed Rate Mortgage during your term. However, it’s important to understand:<ul><li>You’ll lock in at current fixed rates at the time of conversion, not the rate you originally qualified for.</li><li>Some lenders may offer their best fixed rate, while others may provide a higher posted rate—so ask in advance.</li></ul>Strategy for Managing a Variable Rate Mortgage If you choose a Variable Rate Mortgage but want to minimize risk, consider setting your monthly payment higher than required. For example, set your payment as if you were on the current five-year fixed rate. This allows you to:<ul><li>Pay off more principal while rates are low.</li><li>Create a buffer in case rates rise in the future.</li><li>Reduce overall interest costs and stay ahead of your amortization schedule.</li></ul>Which Mortgage Type is Right for You? A Fixed Rate Mortgage is great for those who prioritize stability and want predictable payments. A Variable Rate Mortgage can be beneficial if you’re comfortable with some risk and want to take advantage of potential interest rate savings.Ultimately, the right mortgage depends on your financial goals, risk tolerance, and market conditions. If you’re unsure, consulting with a mortgage broker can help you make the best choice for your situation.As always, I am here to answer any mortgage related questions that you may have and help you crunch any numbers that you don’t quite understand - <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener">book a call here</a>.

Fixed vs Variable Rate Mortgages

Black Office Calculator with ''MORTGAGE'' on Digital Display Among Office Products

On Jan 29th, the Bank of Canada (BoC) implemented a 25-basis-point rate cut to their overnight rate. While this might bring some relief for borrowers, it may not be a long-term trend. In fact, there’s a good chance rates won’t stay low for more than 9 to 18 months—especially with factors like U.S. tariffs and inflation potentially reversing the rate-cut momentum.So, what does this mean for homeowners, buyers, and anyone needing a mortgage? Let’s break it down.<h3>Rate Cuts: A Short-Term Boost or Long-Term Relief?</h3>When interest rates drop, borrowing gets cheaper, and we often see: ✔ Lower mortgage payments for those renewing or locking in a new rate. ✔ Increased homebuyer demand, as affordability improves. ✔ A more active real estate market, even in winter.But it’s important to be realistic—this might be temporary. If inflation picks up or new economic challenges arise (like potential U.S. tariffs on Canadian goods), rates could climb back up sooner than expected. That’s why being strategic with your mortgage decision is crucial.<h3>&nbsp; Key Market Updates You Should Know</h3>📉 Canada’s 5-year bond yield has dropped slightly over the last few days. Bond yields influence fixed mortgage rates, so if this trend continues, we could see some relief in fixed rates soon.📊 What are the experts predicting?&nbsp;<ul><li>The median forecast for 2025 suggests the BoC’s overnight rate could drop to 2.50% later this year. (Currently it sits at 3%).</li><li>Meanwhile, in the U.S., the Federal Reserve held rates steady for now. Since Canada often follows U.S. economic trends, this is something to watch.&nbsp;</li></ul><h3>How to Make Smart Mortgage Decisions in an Uncertain Market</h3>With so much uncertainty ahead, here are 9 practical strategies to help you navigate your mortgage decision:1. Considering a Variable Rate? If you’re comfortable with some risk and plan to keep your mortgage for 5+ years, a variable rate could still be a good option due to its flexibility and potential savings over time.2. Need Budget Certainty? If you prefer stable payments, a fixed-payment variable rate is a better choice than an adjustable-rate mortgage (ARM). It keeps payments steady even if rates fluctuate.3. Locking in a Fixed Rate? If your closing date is a few weeks away, securing a 5-year fixed rate now can protect you in case rates rise again. If rates drop before closing, you may still have time to switch to a shorter term.4. Renewing Soon? If you’re up for renewal in the next few months, check if your lender allows an early renewal to lock in today’s lower rates before they potentially go up again.5. Variable vs. 3-Year Fixed? Right now, variable rates and 3-year fixed rates are similar in cost. If you’re leaning towards fixed, choose a lender with flexible renewal options to avoid costly penalties.6. Need Extra Financial Cushion? Consider setting up a home equity line of credit (HELOC) now while you still qualify. This gives you a backup plan if financial conditions tighten later.7. Want Lower Payments? Extending your amortization period can help keep monthly payments lower, with the option to pay down your mortgage faster later.8. Trying to Time the Market? If you plan to switch to a fixed rate later, choose a lender with fair conversion terms to avoid unexpected penalties.9. The Best of Both Worlds? A hybrid mortgage (half fixed, half variable) provides rate security while allowing you to benefit if rates fall. It’s an option worth considering in today’s uncertain environment.<h3>&nbsp;What’s Next?</h3>The latest rate cut may create a short-term window of opportunity for homebuyers and those renewing mortgages. However, the bigger picture remains uncertain, and rates may climb again within the next 9 to 18 months if inflation pressures build up.If you’re unsure what strategy is best for you, let’s chat! I can help you make the right choice based on your financial goals and risk tolerance.<a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" data-mce-selected="inline-boundary">Book a Call here﻿</a>Let’s make sure you’re set up for success in 2025—no matter what the market throws our way!

What the Bank of Canada Rate Cut Means for You & How to Navigate Mortgage Uncertainty

<h3>How Does the Prime Rate Affect You?</h3>On Dec 11th, 2024 the Bank of Canada has cut its overnight key interest rate by 50 bps to 3.25%, aiming to stimulate economic growth amid uncertainties like proposed U.S. tariffs and reduced immigration targets. Governor Tiff Macklem signaled a cautious approach to future rate adjustments, focusing on fostering growth and maintaining inflation near 2%.Key Points:<ul><li>The 50 bps cut is the second in a row, aiming to move away from restrictive monetary policy.</li><li>Reduced immigration and trade uncertainties could impact the economy.</li><li>Consumer spending and housing activity have improved, but weak business investment and exports weigh on growth</li></ul>I have received so many calls and emails from clients and potential borrowers asking how the drop in the Bank of Canada’s overnight rate affects their existing mortgage.&nbsp;The answer is: it depends whether you are in a Fixed, Variable or Adjustable Rate mortgage!!But first, let’s go back to some basics:Fixed-rate mortgage rates in Canada are priced off of Government of Canada 5-year bond yields that are, in turn, influenced by the U.S. Treasuries. Variable-rate mortgages are affected by the Bank of Canada's monetary policy, namely interest rate hikes and cuts that, in turn, impacts commercial banks' Prime lending rate.Understanding the Prime Rate in Canada: The Prime Rate is the interest rate that major banks in Canada use to set interest rates for variable loans/mortgages and lines of credit. It’s influenced by the Bank of Canada’s Overnight Rate, which is the rate at which banks borrow and lend to each other overnight.&nbsp;Consider the prime rate as the foundation upon which these other interest rates are built. As the prime rate in Canada fluctuates, the interest rate you pay on your adjustable/variable rate mortgage also adjusts accordingly.If you are like me, and you like to look at numbers, here is a table summarizing the Prime Rate changes in Canada from 2010 to 2024: This table captures the key changes in the prime rate along with the dates and the magnitude of changes from 2010 to 2024.<table border="1" style="border-collapse: collapse; width: 100%; float: left;"><tbody><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">Effective Date</td><th style="width: 25%; border-color: #000000;">Prime Rate</th><td style="width: 20px; border-color: #000000;">Change</td></tr><tr><td style="width: 40px; border-color: rgb(0, 0, 0);">Dec 11th, 2025</td><td style="width: 25%; border-color: rgb(0, 0, 0);">5.45%</td><td style="width: 20px; border-color: rgb(0, 0, 0);">-0.50%</td></tr><tr><td style="width: 40px; border-color: #000000;">October 23, 2024</td><td style="width: 25%; border-color: #000000;">5.95%</td><td style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr><td style="width: 40px; border-color: #000000;">Sept 4, 2024</td><td style="width: 25%; border-color: #000000;">6.45%</td><td style="width: 20px; border-color: #000000;">-0.25%</td></tr><tr><td style="width: 40px; border-color: #000000;">July 24, 2024</td><td style="width: 25%; border-color: #000000;">6.70%</td><td style="width: 20px; border-color: #000000;">-0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">June 5, 2024</td><td style="width: 25%; border-color: #000000;">6.95%</td><td style="width: 20px; border-color: #000000;">-0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">July 12, 2023</td><td style="width: 25%; border-color: #000000;">7.20%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">June 8, 2023</td><td style="width: 25%; border-color: #000000;">6.95%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">January 25, 2023</td><td style="width: 25%; border-color: #000000;">6.70%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">December 8, 2022</td><td style="width: 25%; border-color: #000000;">6.45%</td><td style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">October 27, 2022</td><td style="width: 25%; border-color: #000000;">5.95%</td><td style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">September 8, 2022</td><td style="width: 25%; border-color: #000000;">5.45%</td><td style="width: 20px; border-color: #000000;">+0.75%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">July 14, 2022</td><td style="width: 25%; border-color: #000000;">4.70%</td><td style="width: 20px; border-color: #000000;">+1.00%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">June 2, 2022</td><td style="width: 25%; border-color: #000000;">3.70%</td><td style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">April 14, 2022</td><td style="width: 25%; border-color: #000000;">3.20%</td><td style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">March 3, 2022</td><td style="width: 25%; border-color: #000000;">2.70%</td><td style="width: 20px; border-color: #000000;">+0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">March 30, 2020</td><td style="width: 25%; border-color: #000000;">2.45%</td><td style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">March 17, 2020</td><td style="width: 25%; border-color: #000000;">2.95%</td><td style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">March 5, 2020</td><td style="width: 25%; border-color: #000000;">3.45%</td><td style="width: 20px; border-color: #000000;">-0.50%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">October 25, 2018</td><td style="width: 25%; border-color: #000000;">3.95%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">July 12, 2018</td><td style="width: 25%; border-color: #000000;">3.70%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">January 18, 2018</td><td style="width: 25%; border-color: #000000;">3.45%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">September 7, 2017</td><td style="width: 25%; border-color: #000000;">3.20%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">July 13, 2017</td><td style="width: 25%; border-color: #000000;">2.95%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">July 16, 2015</td><td style="width: 25%; border-color: #000000;">2.70%</td><td style="width: 20px; border-color: #000000;">-0.15%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">January 28, 2015</td><td style="width: 25%; border-color: #000000;">2.85%</td><td style="width: 20px; border-color: #000000;">-0.15%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">September 9, 2010</td><td style="width: 25%; border-color: #000000;">3.00%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">July 21, 2010</td><td style="width: 25%; border-color: #000000;">2.75%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr><tr style="border-color: #000000;"><td style="width: 40px; border-color: #000000;">June 2, 2010</td><td style="width: 25%; border-color: #000000;">2.50%</td><td style="width: 20px; border-color: #000000;">+0.25%</td></tr></tbody></table>If you have an Adjustable or Variable rate mortgage or a line of credit, your interest payments will fluctuate with changes in the prime rate. &nbsp;Changes in the prime rate can also impact the interest rates on savings accounts and other investments.For Those Who Already Have a MortgageAdjustable Rate Mortgage: Your payments will decrease by approximately $30 per month for every $100,000 you owe.Variable Rate Mortgage: Some mortgages have static payments, and despite that your interest rate will go down, you will not see a decrease in your mortgage payment. Simply, &nbsp;more of your payment will go towards the principal, and less towards interest.Fixed Rate Mortgage: There will be no changes.For Those Who Are Getting a Mortgage (Pre-approved or Approved)Adjustable/Variable Rate Mortgage: Your pre-approval or approval will have its "prime rate" lowered, and your estimated payments will decrease by approximately $30 per month for every $100,000 you are about to borrow.Fixed Rate Mortgage: There are no significant changes to the fixed rates at this time. Fixed mortgage rates are closely tied to the yields on Government of Canada bonds, particularly the 5-year bond yield. As bond yields rise or fall, fixed mortgage rates tend to follow.As always, I am here to answer any mortgage related questions that you may have and help you crunch any numbers that you don’t quite understand - <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener">book a call here</a>.

How Does the Prime Rate Affect you?

Friendly insurance manager or mortgage broker meeting with clients at her office

The big question on everyone’s mind is: Will mortgage rates go up or down? It’s a tug-of-war between forces pushing rates lower and those keeping them elevated. Here’s a breakdown of the key factors shaping the future of rates.<h3>Forces Supporting Lower Mortgage Rates </h3><ol><li>Bank of Canada (BoC) Easing - The BoC’s efforts to lower rates can drive bond yields down, which often leads to reduced mortgage rates. However, markets may already be anticipating further accommodation, muting its impact.</li><li>Potential U.S. Tariffs If the U.S. imposes significant tariffs on Canada, it could slow GDP growth substantially, pressuring rates to fall.</li><li>Population Declines Fewer people participating in the economy means less spending and investment, which can lead to slower growth and lower rates.</li><li>Weak Labour Market Trends Declining hours worked and softening wage growth are signs of economic slack, which tend to lower borrowing costs.</li></ol><h3>Forces Pushing Against Lower Mortgage Rates </h3><ol><li>Bank of Canada Easing (Again) - While initial rate cuts reduce yields, too much stimulus can eventually spark growth, prompting markets to expect rate hikes.</li><li>Potential U.S. Tariffs (Again) Tariffs could raise the cost of goods, inflating prices and fueling inflation expectations, which may increase rates.</li><li>Economic Resilience Canada’s economy is still showing signs of strength, with rising full-time employment and a rebound in housing activity. These factors can keep rates stable or higher.</li><li>Core Inflation Trends Inflation may be muted in the short term, but core inflation is creeping upward, creating resistance to lower rates.</li><li>Government Stimulus Spending Consumer spending remains robust, buoyed by potential federal stimulus programs. This spending props up inflation, making rate cuts less likely.</li><li>Strong Wage Growth Wage growth remains strong, ranging from 3.9% to 5.5% depending on the data source. This supports inflation and limits rate cuts.</li><li>Currency Depreciation A weaker Canadian dollar boosts export competitiveness but increases import costs, which can fuel inflationary pressures.</li><li>Rising Term Premiums on Bonds Bond investors’ concerns about government spending have driven term premiums higher, adding upward pressure on rates.</li></ol><h3>Why It’s Hard to Predict Rates</h3>While market pricing reflects the collective wisdom of traders, even “Mr. Market” struggles to look beyond a year with clarity. Research shows that traders’ projections beyond one or two quarters often lack accuracy.For borrowers who are risk-averse, this uncertainty underscores the importance of hedging their bets. Inflation, growth, and policy surprises could shift rate expectations dramatically in either direction.<h3>What Should You Do? </h3>In a market this unpredictable, the smartest move is to evaluate your options now. Whether you're buying, refinancing, or renewing, preparing for different scenarios can help you lock in savings or avoid unexpected costs.Want to discuss your strategy? <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener">Reach out today</a>—we’ll help you build a plan that’s tailored to your goals.

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