How Rising Mortgage Interest Rates will Affect You?

Matrix Mortgage Global – How Rising Mortgage Interest Rates will Affect You

Over the last week, we have watched as one by one, Canadian banks have raised their interest rates on mortgages. If you are wondering why this is happening, there are several factors to consider. For starters, the rate on Canadian bond yields have gone up – but this hasn’t been enough to justify the extent of the increases at the chartered banks.

Other factors at play include the fact that nearly half of all mortgages will be up for renewal this year, and the new mortgage stress test will make it more difficult for many Canadians to shop around. Instead of trying to become more competitive to increase revenues, it seems that some lenders are working instead to try and lock in their current clients and make it harder for them to seek alternatives.

If you are in the market for a mortgage this year, here’s what you need to know about how rising interest rates will affect you.

How rates will affect new homebuyers

If you are a new homebuyer, then it is likely that you will be the least affected by rising rates. That’s because, in addition to their posted rates, banks also have special rates that they are willing to offer to well-qualified new clients. These discretionary rates are unlikely to change much in the near future.

How rates will affect mortgage renewals

There are two ways that rising interest rates may affect existing homeowners. First, it could make it more difficult for homeowners to pass the stress test should they want to move their mortgage to another lender. Second, should they wish to break their mortgage or pay it off early, penalties to do so could be much steeper.

How can you minimize the impact of rising interest rates?

If you are currently in the market for a new home, the first thing you should do is get pre-approved for a mortgage. This way you can lock in the current rate and you won’t have to worry if rates go up again in the near future.

If you already have a mortgage and it is up for renewal this year, don’t assume that your bank’s offer is the best that you can get. If you are not happy with the rate that you have been offered, then it is time to get on the phone to a mortgage broker.

There are some strategies you may be able to use to avoid the stress test and mortgage brokers know the tricks of the trade to help you do this. To learn more, call Matrix Mortgage Global today at 1-877-379-7318.