Bank of Canada raises interest rates for first time in 7 years
  
The Bank of Canada is hiking its key interest rate for the first time in seven years, joining the U.S. Federal Reserve in starting the process of undoing nearly a decade of easy money.
The bank raised its overnight lending rate to 0.75 per cent from 0.5 per cent Wednesday, citing “bolstered” confidence that the Canadian economy has finally turned the corner after years of sputtering growth
.https://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-interest-rate-decision/article35662991/
Should You Switch To a Fixed Rate Mortgage?
If you listen to the media, it sounds like rates are jumping to 10% and everyone will be filing for bankruptcy shortly.
In reality a fix rate mortgage only protects you for 5 years of your 30 year mortgage.
At the end of every mortgage term, you end up renewing into current mortgage rates.
From year 30 to year 25, on average you only have paid down 15% of your mortgage.
This means you still owe 85% of your original mortgage balance.
Your 85% mortgage balance will now be exposed to current market rates.
If rates are up, you are now paying that rate.
Instead of getting a fixed rate based on fear, do it based on math.
Note:
The only time you should consider a fixed mortgage rate is:
1. The lender has a good fixed mortgage penalty calculation
2. You have no choice due to qualification
3. Fixed is less than variable or very close to variable
4. You want the piece of mind after you understand the mathematics behind it
Variable Rate Going Up .25% - What will happen to your payment?
*** #'s are based on 2.2% going to 2.45%
.25% Increase with a 30 Year Amortization Mortgage
$100,000 + $12/month
$250,000 + $30/month
$500,000 + $60/month
$750,000 + $90/month
$1,000,000 + $120/month
$1,500,000 + $180/month
$2,000,000 + $240/month
$3,000,000 + $360/month
.25% Increase with a 25 Year Amortization Mortgage
$100,000 + $13/month
$250,000 + $32/month
$500,000 + $65/month
$750,000 + $98/month
$1,000,000 + $130/month
$1,500,000 + $195/month
$2,000,000 + $260/month
$3,000,000 + $390/month
.25% Increase with a Line of Credit
$100,000 + $21/month
$250,000 + $52/month
$500,000 + $104/month
$750,000 + $156/month
$1,000,000 + $208/month
$1,500,000 + $312/month
$2,000,000 + $416/month
$3,000,000 + $624/month
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