The impact of an interest-rate rise on homeowners
Author: Sound Choices
May 15, 2018
The content in the below article is meant for Canadian investors only.
Nearly half of all Canadian mortgages are up for renewal this year – these homeowners are now facing the impact of several interest-rate hikes over the last year.
The 5-year fixed-term mortgage rate was 7% in 2008.
Could it happen again?
How much will a mortgage payment go up?
Assuming a 25-year amortization period, we’ve looked at three interest rates and mortgages representing typical housing prices across the country:
- 2.75% = competitive 5-year fixed mortgage rate (May 2013)*
- 3.25% = best rate today (May 2018)**
- 5.50% = bank’s posted rates today (May 2018)**
Even though the interest-rate increase may not seem high, this can translate into a significant difference to your monthly budget – especially over a one-year period or the life of the mortgage.
Talk to your Financial Advisor about how an interest-rate hike will impact your monthly budget and your financial plan.
*Source: Posted Historical 5-Year Fixed Mortgage Rates. RateHub Inc.
**Source: Mortgage Rate History. The Mortgage Group.
1 Compared to 2.75%.
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