As we move into the Fall market, there are some important things you should be aware of. While inflation has now likely peaked, we will still be dealing with the repercussions from these heightened levels for a while before things balance out. As inflation is corrected, we are also seeing home prices moving back to normal post-pandemic era. However, we are still anticipating some final rate hikes from the Bank of Canada coming into the fall, one of which happened yesterday adding another 0.75% to the overnight lending rate.
Understanding Mortgage Trigger Points
With that in mind, now is an important time to discuss what this means for your mortgage – specifically in regards to trigger points. Another increase in rates on the horizon will put many variable-rate borrowers near their mortgage trigger points – even for fixed payments.
While static payment variable-rate mortgages are not designed to fluctuate with prime, the reality is that a mortgage payment consistent of two components: your principal and your interest. With the existing rates and subsequent increases expected in the fall, the amount paid towards principal has decreased with an increase in the amount of interest on a static mortgage.
Reached Your Trigger Point?
Don't Panic!
You are certainly not alone and there are options:
Let's talk it through
While I understand words like “inflation” and “trigger rates” can be scary, as your dedicated mortgage professional I am here for you. I would be happy to discuss any concerns you have or help explain in more detail how these changes may impact your mortgage and what your options are.
Tim Ward, Collingwood Mortgage Broker.
