{"id":1791,"date":"2022-02-24T22:51:08","date_gmt":"2022-02-24T22:51:08","guid":{"rendered":"https:\/\/mymortgagepros.com\/?p=1791"},"modified":"2024-02-08T05:45:54","modified_gmt":"2024-02-08T05:45:54","slug":"the-mortgage-rate-hike-has-begun","status":"publish","type":"post","link":"https:\/\/mymortgagepros.com\/the-mortgage-rate-hike-has-begun\/","title":{"rendered":"The mortgage rate hike has begun."},"content":{"rendered":"\n
At this time Bank of Canada raise rates only slithly at its recent meeting of January, it is clear that interest rates are on their way up.<\/p>\n\n\n\n
It is understandable that those with variable-rate mortgages are on edge now despite the fact they may still be better off with a fixed rate, despite several Bank of Canada<\/a><\/strong> rate increases. However, I understand that nobody wants to pay more interest.<\/p>\n\n\n\n Therefore, how can those with variable-rate mortgages mitigate the impact of the upcoming rate hikes? Several options are available.<\/p>\n\n\n\n 1. Embrace the wave.<\/strong><\/p>\n\n\n\n In the long run, variable-rate mortgages have historically been better than fixed-rate mortgages. However, there are some instances where this may not be the case. In the Bank of Canada’s last hike cycles, interest rates have been raised by an average of 144 basis points, if the past is a guide to the future. By the end of this year, the Bank of Canada is expected to hike rates five times, or 125 basis points. The average big-bank forecast predicts that by the end of 2023, overnight rates will be 1.75 percent, so roughly 150 basis points higher than they are now. Having a spread of 150 basis points between fixed and variable rates (averaging high-ratio and conventional rates), the chance of you breaking even is relatively high.<\/p>\n\n\n\n 2. Commit to a fixed rate.<\/strong><\/p>\n\n\n\n