Archive for April, 2012

Good News – Bad News From The Bank of Canada

Wednesday, April 18th, 2012

Once again, Bank of Canada’s Mark Carney and Finance Minister Jim Flaherty were warning Canadians about their ever increasing debt burdens.

As of today, the Bank of Canada rate remains at one percent.  However there are signs that the economy is improving, which is the good news … the bad news is that when it improves, the Bank of Canada rate WILL go up, and mortgage rates will also increase.

“As expected, governor Mark Carney and the Bank of Canada again maintained interest rates at a stimulus-level one per cent Tuesday. But his upbeat assessment of the economy sent the clearest and most hawkish signal yet that rates will be moving higher – probably sooner, rather than later.”

Regina Leader Post

Jim Flaherty gave Canadians this stern warning:

“Interest rates are going to go up. There’s only one way they’re going to go. Get realistic about it and say, ‘will I be able to afford my mortgage at a higher interest rate or not?’ Do the arithmetic and figure it out”

There IS cause for concern:

In 2001 less than 1% of consumer spending was financed through home equity  … today 3% of everything Canadians spend is money that is borrowed against our homes.

Equity lines of credit have increased 800%,  from $8 billion in 2001 to a staggering $64 Billion in 2012.

What can YOU do about it? 

Averbach's Onlne CalgulatorUse our online calculators to figure out what your mortgage payments will be when rates increase.  Can you afford the increase in monthly fees?

Better yet … do the calculations above and increase your payment to the increased amount today. You will not only rest assured that you can make the extra payment, but you will be paying off your mortgage faster. When the time comes to renew (presumably at higher rates) you will already have paid down a chunk on the principal portion of your mortgage.  ** Call your mortgage lender to see if you are able to make increased monthly payments against your mortgage. Many mortgage loans allow extra monthly or yearly payments.