Join Sarah Logue for a Starbucks with Amy Thompson from City Mortgage Group as they discuss the impact of the recent rate increase and how it will effect your variable mortgage rate. Learn how to best prepare and maximize your buying power by getting your pre-approval in place. Amy was awarded first place in the 2018 Reader’s Choice Awards Best Mortgage Agent. Congrats Amy Thompson! Thank you for helping Team Logue clients with all their mortgage needs.
I’m joined with Amy Thompson from City Mortgage Group. We’re so excited to look at how this new rates going to impact our buyers and sellers.
I’m Amy Thompson from Citi mortgage group and if you’re in the market for buying a home it’s good to know all your options and where your financial comfort lie. Amy thanks for joining me at Starbucks. Thank you for having me.
So yesterday I’m reading an email from you and I’m like “Shoot! What is going to happen with this new rate increase?” I know we’ve been, you know preparing for it all year and our buyers we’ve been coaching them to talk to you, make sure their pre-approval is in place. But I think it sends out more of a panic when I start talking to clients yesterday about it and we actually have in front of us. So let me understand what is 1.75 percent BOC Bank of Canada mean what does this increase mean for us? So some people don’t realize that the Bank of Canada rate is actually their prime rate. Right. So this being said prime has now increased from 3.7 to 3.95. Okay doesn’t sound so painful that way. No it doesn’t sound so painful but this affects buying power. So people who are looking to purchase with a variable mortgage, some products now qualify at this higher rate where we’ve been safe with a benchmark but now this new rate change effects that qualifying part where on some variable mortgages.
Okay now the big question I may not ask regularly and as agents I get asked this, “Do I stick with the fixed? Or do I go with the variable?” Because now there’s almost a full point spread there right? Well I like to say there’s two kinds of people out there. There’s someone who can sleep at night knowing that tomorrow their mortgage rate may change and there’s people and there’s people who need to sleep at night knowing their mortgage payment will not change. There is a premium on a fixed mortgage but with this rate increasing you need to know your affordability on how many increases you can afford before it makes sense to secure in a fixed rate. That’s sort of in alignment with the stress test though right? So if you’re gonna do a variable rate you’re already of qualifying under a stress test rate you have to know where you can max out. So that’s not too different. So give it to me in plain numbers I have four hundred thousand dollar mortgage, what does that mean? With this new increase it’s just shy of thirteen dollars for every hundred thousand dollars in your mortgage. Meaning that if you have a four hundred thousand dollar mortgage this rate increases probably up to your monthly payment by about fifty dollars. Okay so weekly I have to cut out two lattes a week. Exactly. That could be challenging but thirteen dollars truly isn’t that painful to protect our industry overall.
Alright so best advice though and we’re constantly preaching your name and congrats on your readers choice that is so amazing! You’ve been wonderful in helping our clients get your pre-approval. Your pre-approval lasts for 120 days. So those pre-approved before this rate change have locked into their rate for a hundred and twenty days from that pre-approval date. But with rates on the rise and they’re continuing to rise get your pre-approval in now so that we can lock in a rate for you for one hundred and twenty days so that you when you’re out there looking for the perfect home you have it in your back pocket. And I think you always make a good point our banks are amazing to work with but you’re a great option for someone just looking for that mortgage piece and looking for another piece of advice they can shop a mortgage rate for them. Well there’s so many different products out there banks typically fit one perfect product where there’s a lot of business owners, new business owners people that don’t typically fit that perfect box that we have a home for.
Alright we will make sure our buyers contact you before they get the financing done on their next purchase. Thank you! Appreciate it thank you for joining us today. If you have any further questions on how the new rate increase is going to affect you please feel free to reach out to us and check us out at teamlogue.ca