As was widely reported yesterday, the Bank of Canada once again increased the benchmark overnight interest rate. This interest rate is what variable rate mortgages are based off of. It means that variable rate mortgage holders are directly impacted by this change in the short term interest rate.
It is unfortunate that many homeowners who bought a home in the most recent years are now facing increasing financial stress and strain. This is due to the fact that mortgage rates have escalated rapidly in just over the past year. Variable rate mortgage holders have faced payment shock and seen either payments rise rapidly and/or amortizations extended.
As I always advise my buyer clients, it is for this very reason that it is critical to purchase a home within traditional affordability guidelines. See my web posts on affordability guidelines and budgeting to better understand why overextending is a high risk endeavour, as many homeowners are now learning the hard way.
See "Breaking down the Bank of Canada's unexpected June hike" from the Financial Post, below:
The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.