• Sarah Mathieu

Bank of Canada Made Their Decision!

Just as we anticipated, another increase for the Bank of Canada (BOC) Overnight Rate on September 7th, 2022. The rate increased by 75 BPS, which is an increase of 0.75%.


What does this mean for Prime Rate?

Well, most people don't realize that the BOC Overnight Rate & Prime Rate are not the same thing. However, Prime tends to go up and down with the Overnight Rate changes.

So within a day or two, most lenders will have updated their Prime rate to reflect the recent increase of 0.75%.

The Impact Prime Rate Has On Your Mortgage

Fixed Rate Mortgages = Everything remains the same, no change in payment.


Adjustable Rate Mortgages = Your payment will increase according to the Prime Rate. You will likely receive a letter in the mail outlining your payment increase amount.


Static Variable Rate = Your payment will stay the same, but the portion of interest paid to the lender will change.


If you're in a Static Variable Rate Mortgage, it's important to talk to your mortgage expert about your "Trigger Rate". A Trigger Rate is when your whole payment becomes interest and no principal is being paid off, the lender will need to adjust your payments accordingly.

Even though your payment doesn't change with a Static Variable, it's still a good idea to manual change it yourself. Why? If you want to keep paying down your mortgage and not stretching out your amortization, you'll want to increase your payment as Prime increases.


Payment comparison from 4.70% to 5.45%

For an adjustable rate mortgage, here is a comparison that shows the difference between yesterday's Prime Rate (4.70%) and today's Prime Rate (5.45%).


As you can see below, there is an increase of roughly $219/m on a $500K insurable mortgage.

*This payment comparison is for illustrative purposes only. It is not a commitment to lend or pre-approval. Rates are subject to change without notice.


If you have any questions or concerns, don't hesitate to reach out. I'd be happy to go over your options with you and help you find a mortgage that you're most comfortable with.


Luc & Sarah Mathieu Licensed Mortgage Brokers Powered by DLC National Ltd. 12360

C. 250-320-5555

E. info@mortgagetech.ca

W. mortgagetech.ca

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