Published on July 15, 2019 by MultiPrêts MR
When the prime rate starts increasing, the payments of most variable rate mortgage loans will increase as well.
Some variable rate mortgage holders will see their payments increase faster than others because some lenders transfer rate increases to their customers faster than others.
Most lenders increase their customers’ rates as soon as the prime rate changes, or on the first day of the following month. Other lenders let a little more time pass by before increasing their rates, e.g., if they adjust their variable mortgage rates every three months, the increase will be effective on the date the lender adjusts its rates. When rates are increasing, this policy allows customers to save on interest fees.
However, when the prime rate decreases, this policy will have the reverse effect on the interest rate. Nevertheless, considering how low current rates are, many people will tell you that rates are more likely to increase than decrease in the next five years.
In summary, if you are looking to take out a variable rate mortgage loan today, it would be a good idea to look into the lender’s policy on rate adjustment. Contact us.
Source: www.canadianmortgagetrends.com
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