Mortgage Rates Continue Their Climb

“Its Not Time For Chicken Little Yet As The Sky Isn’t Falling At The Moment, But Mortgage Rates Are Continuing To Rise And Need To Be Taken Seriously By Mortgage Holders”

Yesterday the Royal bank increased its fixed rate mortgage program by 15 basis points with the TD following close behind and all others expected to be making similar moves in the next day or two.

The trend to higher rates continues as has been predicted and talked about over the last couple of months.  The Bank of Canada still hasn’t moved its overnight prime lending rate, but that could change by as early as June.

So with out sounding like a broke record, everyone needs to start rethinking their mortgage rate and repayment strategies.   As an economy in general, we have developed a mindset of longer amortization periods and floating interest rates where the masses have ridden out an unprecedented period of cheap mortgage money that have allowed many to purchase a home for the first time and many others to buy larger homes.

But as rates increase and continue to increase, the realities of interest rates settling in at a higher range over the coming months and perhaps years means that its going to cost more to pay for housing, that there will be less money to spend on other things, and that faster repayment strategies are going to be essential to avoid excessive future cash flow being paid towards interest payments.

While the CMHC’s latest consumer mortgage survey indicates that consumers are comfortable with the first round of mortgage rate hikes, or felt they could easily adapt to them, the same is not expected to be true with further increases.

For first time mortgage holders, it has been easy to be spoiled by the current mortgage rates and potentially live to the fullest extent of their means without a great deal of equity in the home and a long term mortgage amortization in tow.

Now is the time to rethink and re-valuate your long term financial goals and where you plan to spend your disposable income in the future.  It doesn’t make any sense to ignore the obvious and those that do will find themselves in a cash flow crunch and potential crisis that could have been avoided through a bit of forward thinking.

At the same time, we are not talking about a panic as interest rates are still very low in relation to historical levels.  But its better to be safe than sorry and a slow rate creep upward over time can catch up to you, directly impacting your lifestyle and retirement goals.

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About the Author Joe Walsh

I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel