How­ever, the cur­rent lull in eco­nomic growth looks to be a one-time hit from gaso­line prices and tem­po­rary sup­ply chain dis­rup­tions. If this gives way to a re-acceleration, rates will have to rise. Hold­ing them low for too long could fuel what may already be an over­shoot in hous­ing prices. This would require a sharper run-up in rates down the road, which would make a smooth house price adjust­ment less attainable.

Overnight rate likely to be .75% higher by year end.

While gov­ern­ment fis­cal tight­en­ing, slow US growth, high Cana­dian dol­lar and a fad­ing com­modi­ties rally all cause the Bank of Canada to post­pone rate hikes, there are risks in wait­ing too long—namely, poten­tial infla­tion which could lead to steeper rate increases in the future.

There­fore, we believe the Bank will take the grad­ual approach and start rais­ing rates in Sep­tem­ber. By the end of the year, the overnight rate is likely to be .75% higher than it is now.

Lock­ing in ver­sus con­tin­u­ing to float.

There have been repeated delays in Bank of Canada rate increases over the past sev­eral months. In this envi­ron­ment, con­tin­u­ing to remain in a vari­able rate mort­gage has its advan­tages. How­ever, rate increases will even­tu­ally come, and the later that hap­pens, the steeper they could be. To help decide which mort­gage strat­egy is right for you, please con­tact me for a no-cost analy­sis of your finan­cial situation.

Here’s a lit­tle video explain­ing the need to pay off those bad debts.  If you’re car­ry­ing high inter­est debts, NOW is the time to pay them off before rates look to increase later this year, or early next.

Some lenders sug­gest increas­ing pay­ment fre­quency from monthly to bi-weekly to help pay off your mort­gage faster. But as your local mort­gage expert, I have a bet­ter sug­ges­tion. While pay­ing more often may save you a lit­tle money over the life of a 30 year mort­gage, it usu­ally only saves you pen­nies dur­ing the first 5 year term!

What I rec­om­mend instead is accel­er­ated bi-weekly pay­ments. Like bi-weekly, you’re mak­ing 26 pay­ments per year. But with accel­er­ated bi-weekly, you increase the amount of your bi-weekly pay­ments to the same amount they’d be if you were pay­ing semi-monthly.

The extra cost per month is min­i­mal, but the sav­ings are HUGE!

For exam­ple, based on a $300,000 mort­gage at 3.79% with a 30 year amor­ti­za­tion, the accel­er­ated bi-weekly pay­ment option would save you $7.723.05 after the first 5 year term.

 I’d be happy to work out how much you can save and show you how to save even MORE by mak­ing lump sum pay­ments! For more info give me a call today at 416−698−9990.