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Another Prime Rate Increase - Is it time to lock in?

I am not an economist. I could explain that the Bank of Canada has increased the Prime Rate for the eight time in a row because of .... on going tight labour market conditions or because Canadian's are being encouraged to pump the breaks on spending and real estate purchases but we all know what happened when our parents told us to stop (fill in the blank). "You can't tell me what to do!". We were determined to do the opposite.

We are living in a time of excess AND access to what we want, when we want it, with a click of a button. Every bobble, dongle or contraption we can image can be dropped on our door step from across the globe in days. Try getting into a restaurant in St. John's, NL with out a reservation! Not happening! We are all seeking connection, convenience, experiences and that costs $$.

We justify spending money differently than our parents and I don't see that changing anytime soon.

The concept of increasing interest rates to slow spending may have been effective 20 years ago but these are different times which call for a different approach. I don't have the answers to slowing the economy and inflation but let's get real on what an increase looks like.

A 0.25% raise in the Prime Rate will increase your adjustable mortgage by $20.00 monthly for every $100,000.00 in mortgage balance. An average mortgage balance of $250,000.00 will mean an increase of $50.00 per month, is that really going to slow consumer spending or the real estate market?

As a mortgage broker I am responsible for providing my clients with options based on their current financial circumstances and the flexibility if they need to make changes in the future. . I listen, offer an opinion, but I can't tell you that locking into a fixed term is the best option for every mortgage holder. But, if you are struggling to cover your monthly expenses or you are looking for some certainty in your monthly expenses (after eight rate increases, I completely understand), I can help you navigate the options and the lock in process.

Tonia Mercer | The Mortgage Missus Inc.

About the author,

Tonia Mercer is an independent mortgage broker. She has been in the industry for 15 years and in 2021 she launched her own brokerage The Mortgage Missus Inc.

Tonia is passionate about financial education and believes that working with independent experts is the best way to get unbiased, professional advice. She has joined forces with local independent home and auto, financial advisor, legal, appraiser and real estate service providers.

Effectively creating a concierge service for all things financial and real estate.

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