Are You Ready for Canadian Mortgage Interest Rates to Go Up?
Currently, Canadian mortgage interest rates are at record lows. This has been great for those looking to obtain mortgage financing over the last few years, whether first or second mortgages. However, as the saying goes, nothing lasts forever.
Back in March, CTV News reported that experts are warning of a rise thanks to U.S. bond prices. According to the article, “Fixed rate mortgages, the most common in Canada, are tied to long-term Canadian bond prices, which are in turn tied to U.S. bond prices. Banks sell bonds to raise money to lend to mortgage holders and other borrowers. When the U.S. Federal Reserve raises rates, bond prices typically fall. As bond prices fall, banks tighten their lending, and mortgage rates rise.” This could mean hikes for Canadians looking to refinance their current mortgages.
If mortgage rates rise, many Canadians could be in trouble, especially those with high levels of debt. For example, if five-year fixed rates were to rise from 2.5% to 3% on a $300,000 mortgage, that would result in an almost $80 increase to each monthly payment. An increase to 3.5% would represent almost $150 more per month. Can you afford an increase of $80 a month? What about $150?
Using your mortgage to get your debt in order is a great way to prepare yourself should Canadian mortgage interest rates rise. Doing so can help get rid of the various monthly payments, leaving you with one monthly mortgage payment. This will greatly reduce interest and should help you better manage on a monthly basis. But you have to act quickly.
Start by finding out what your home is actually worth and verifying how much equity you have to play with. These two numbers will help you determine the refinancing option best suited to your situation, be it a first mortgage, a personal line of credit, or a second mortgage.
Even if you have bad credit, having enough equity could put you in a much better financial position, helping to restore your credit and getting rid of some of that stress caused by the debt.
Using your home to refinance and consolidate debt is a great financial option, but you need to strike while the iron is hot. It is best to lock in at the current low rates before things get more expensive.
DebtCare offers a free, fully-customized, property valuation report and mortgage refinancing advice to help you make the most prudent financial decision.
Get in touch today by calling 1 (888) 890-0888.