The Bank of Canada today announced that it will be holding the key overnight rate at 0.25%, surprising many observers. In the past few days, there was intense debate as to whether or not the Bank would raise rates now, or wait till later in the year. Despite holding rates for now, in its statement the Bank of Canada sent a very strong signal that rates will be rising in 2022, with the first increase likely to occur in March. The Bank's main concern is getting inflation under control, which means that there will most probably be multiple rate increases through the course of the year.
What today's Bank of Canada announcement means for you
If you have a variable-rate mortgage or a home equity line of credit (HELOC), for now, you don't have to deal with higher rates. That said, however, you should absolutely be getting ready for rate increases and making sure that you have budgeted for them. One of the best ways for you to get ready for upcoming rate hikes is to simulate a mortgage stress test for yourself. You might determine that your finances are too tight to handle multiple rate increases, in which case you should consider locking into a fixed rate.
Check out the best current mortgage rates
If you're considering getting a new fixed-rate mortgage, today's announcement is also good news, because fixed rates won't rise for a few more weeks. That said, if you're shopping for a home, be sure to look at the best mortgage rates in Canada and make sure you get pre-approved to hold today's fixed rates for the next four months.
Bank of Canada rate announcement: The bottom line
No matter what your mortgage situation is, if you're unsure what to do in the wake of today's Bank of Canada rate announcement, you can always contact one of our agents at CanWise who can go through different mortgage scenarios with you to make sure that you’re ready for rising rates.