Interest Rates News

Wednesday Jul 12th, 2017


As many folks know, the real estate market in the GTA has cooled lately. One reason is that the Bank of Canada has been hinting at an increase in prime rates so consumers were waiting to see how this would impact their mortgage payments and ability to buy.

Today it was announced that the Bank of Canada has raised its key interest rate to 0.75%. This is a 0.25% increase. So what does this mean? Honestly not much if your financial institution only increased your mortgage rate by the same 0.25%. Here's an example by using the mortgage calculator at

If you were considering a home where the interest rate was 2.5% and now the interest rate is 2.75%, your payments would go up approximately $50-$52/month.

What else is important to know?

Many people have fixed mortgages. That means that the interest rate you pay doesn't go up until your term is complete no matter how much the Bank of Canada or your financial institution raises their rates.

What if I want to purchase a new home?

Typically when you purchase a new home you will port your mortgage from your current home. That means that you will carry your mortgage with you. So if you purchase a new home and you don't need any more money for the mortgage then your payments typically won't go up from what you are paying now. But what happens if you need more? Let's say you have a mortgage of $400,000 and once you purchase your new home you need an additional $100,000. Typically you will port your existing mortgage at the rate you are paying then the additional funds will qualify at the current rate. So that means you would only pay the higher interest on the new portion.

It is important to note that every financial institution is different so only your financial coach can guarantee how your payments will change, if at all, with the new interest rate increase.

But in this market is it really a good time to buy a new home?

Absolutely! Interest rates are still extremely low and with the changes around the GTA it is definitely a "buyer's market". That means that prices have really come down from the craziness of the spring and seller's are more willing to negotiate.

Still have questions?

Give me a call - I can help put you in contact with the right financial advisors to answer any mortgage questions you may have and I would be happy to work with you to help you find your next home.

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