Bank of Canada Announcement,
July 11. 2018
The Bank of Canada has increased its benchmark interest rate for the fourth time this year.
The overnight lending rate was raised to 1.50 per cent from 1.25 per cent. When the Bank of Canada changes its benchmark rate, the move ripples through to other interest rates, including those of mortgages. With that in mind, here is a guide to how the rate hike will affect homeowners and prospective buyers.
Bank of Canada Benchmark Rate is 1.50%
Homeowners with fixed-rate mortgages
There is no immediate impact on payments for existing mortgages.
Only when the mortgage comes up for renewal would higher rates affect payments.
Homeowners with variable-rate mortgages
The interest cost on variable-rate mortgages is pegged to your lender's prime rate, minus whatever discount you negotiated. The prime rate is in turn guided by the Bank of Canada's benchmark overnight rate. Payments on most variable-rate mortgages will be adjusted higher in a matter of days or weeks to reflect an increase in the overnight and prime rates.
Summer Ends, Active Real Estate Market Continues…
Members of the Ottawa Real Estate Board sold 1,586 residential properties in August through the Board’s Multiple Listing Service® System, compared with 1,535 in August 2017.
The five-year average for August sales is 1,417. August’s sales included 1,188 in the residential property class, relatively unchanged from a year ago, and 398 in the condominium property class, an increase of 10.9 percent from August 2017.
“Our real estate market has had a busier than usual summer season, and we are shaping up for a busy fall period as well,” affirms Ottawa Real Estate Board President Ralph Shaw. “An active market is likely to be the new normal for the foreseeable future.”
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By Ray Turchansky, For Postmedia News