How much have fixed rates increased so far in 2023?
On January 1, 2022 the best high-ratio, 5-year fixed rate in Canada was 2.34%. As of September 7, 2023, the best high-ratio, 5-year fixed rate in Canada was 5.24%.
From March 2022 to September 2023, fixed mortgage rates in Canada went up a total of 2.9%, which represents an increase of well over 100%.
If your mortgage is coming up for renewal in 2-4 years now is the time to start planning your budget against mortgage STICKER shock. When mortgage rates increase slowly over a term it is easier to be lulled to sleep and then wake up with a big shock when your mortgage matures. But this time rates have been increasing quite rapidly and even more significantly and everyone is talking about the rates so it should come as no surprise that if you are up for renewal in the next 2-4 years you will probably experience this sticker shock if you don’t start planning today.
Below is a Hypothetical situation to show some debt situations and prepare you for a no-cost consultation about your personal situation if you wish.
Mortgage $250,000. 25 years remain on amortization and 3 years on term
Payment @2.04% (Current contract rate) $1063. PLUS TAXES
Payment @ 5.64% (Current Rate in effect today for 5 yr. term) $1546. Plus taxes
That means at maturity your required mortgage payment could go up by $500. Per month
VISA $15,000. 18% - 3% Contract repayment $450. Per month – paid in full 5 year
Master Card 12,000. 18% - 3% Payment $360. Paid in full 5 years
Car loan $15,000 4% Payment $350. Paid in full 4 years
*On credit card balances if you make only the suggested minimum payment on the card it would take approximately 16 years to pay a card in full – if you did not add any new charges.
In this scenario it looks like planning and action could eliminate most of the shock. Some lenders have a 2nd mortgage program, others have an increase an blend payment program or you can use some of your savings or get a short term loan to more quickly pay down the debts at a lower loan rate.
Feel free to call me to discuss a suitable “Game Plan” to keep you and your family happily in your home.
"Knowledge is Power"
So why not call me today for a no-cost consultation on your current debt situation with of view of setting up a game plan for you.
250-861-8758 or email your questions to neil@mortgageman.ca
