What's happening with rates

On July 13th, The Bank of Canada is more than likely going to raise the overnight lending rate by an additional .50%.  Prime rate will increase 4.20%, which will be .25% higher than where we started at the beginning of the pandemic. The fixed rates are currently in the 5.30% range for purchases over $1M and 5.09% for purchases under $1M with less than 20% down.

Variables are still a good deal at approximately 3.30% for purchases over $1M and 3.00% for purchases under $1M with less than 20% down, depending on the lender and client. 

The variable rates are still the product of choice since people qualify for more and will initially pay a rate 2% lower than the fixed rate equivalent. 

Should I lock in?

Borrowers would be locking into a rate that is the highest that it has been in 14-years.  There’s no advantage to locking in a rate this high when many people have a variable rate below 3%, however the following consideration may help make an informed decision:

- Liquidity: do you have enough liquid assets if borrowing costs surge 200+ basis point?

- 5-Year plan: do you foresee an improvement in your income, kids on the way, job transfer, marriage, divorce?

- Re-qualification: if needed to, could you easily get approved for a new mortgage 3-4 years from the present?