The Bank carries out monetary policy by influencing short-term interest rates to stimulate or slow the economy. It does this by adjusting the target for the overnight rate on eight fixed dates each year.
Your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate. This is your update from Mortgage Broker Claire Drage and our team at The Windrose Group on the latest Bank of Canada announcement.
As of 10:00 AM EST on December 6, 2023:
Bank of Canada Held the Overnight Rate at 5.0%
So, rates are still high… shocking. You know, we say it with comic relief because, well, we must at this point. While the conversation has started to shift to discussing potential rate cuts versus hikes, it is no secret that Canadians are struggling right now, and it can be tough to know where to look for relief. We are all cutting our spending to spend less and save more; however, stress levels remain high, just like the rates.
This is even more so for over one-third of Canadians (35.5% in 2022), many of you included, who have a mortgage due to looming renewals at much higher rates. The prospect of higher monthly payments, longer amortizations, the combination of the two, etc. is already having a huge impact on Canadians.
A recent poll from Ipsos on behalf of MNP LTD found many Canadians blame the current economic conditions, which of course includes the Bank of Canada’s announcements, for increased stress (42%) and anxiety (39%) in their households. I mean, the numbers don’t lie – you are not alone in what you may be feeling around your mortgage renewal.
Canadians who considered their debt as “terrible” were more likely to feel increased stress (77%) and anxiety (72%). These individuals also tend to stay home more often (72%) and spend less time socializing (55%) or with family (33%). 51% of Canadians now consider staying home more often as a valid strategy to manage their expenses and budget. Additionally, people are spending less time socializing (35%) or with friends (30%) to help reduce their spending.
We don’t want to bore you with tons of numbers and data (that’s our job as mortgage brokers, not yours!), but this is super important to highlight. It’s clear that these high rates are affecting us beyond financial stress, this is seriously impacting the mental health of so many of us.
Our CEO and Principal Broker, Claire Drage, recently experienced a fair deal of stress surrounding her renewal, which you can read more about by clicking here.
In times of high stress and anxiety, it’s so important not to isolate yourself and to try and stay connected with your friends and family for a sense of comfort and community. It breaks our hearts to see those numbers, but with the cost of living is so high that it is hard not to make these sacrifices to help you keep your financial house in order.
We’re here to help you, and we seriously try to do our best to help empower and educate our clients with the knowledge and confidence to take control of their finances. Just because rates are high right now doesn’t mean that you have no control.
This is why we recently hosted a webinar about our Top Mortgage Renewal Tips and how you can feel educated and empowered to act without a mortgage broker, but this doesn’t mean you can’t contact us! We also do ‘traditional’ mortgage work, too, and can help you, your family, and your friends during their renewal process, during their retirement years, planning for their first home, and more.
So, here’s a quick rundown of what we’re talking about. If you carry a mortgage it renews at the end of the agreed upon term. When you refinance, you are paying out your existing mortgage to negotiate a new mortgage loan agreement. If you don’t act, the renewal of your mortgage term may be automatic. This means you may not get the best interest rate and conditions.
If you’re feeling overwhelmed or unsure about how to navigate the mortgage renewal process, you should watch our recent webinar. We provide valuable tips and negotiation strategies for renewing your mortgage. We also go through a few specific scenarios to review the best course of action in each case – one of these is likely similar to the one you may be in now.
If you’re interested in learning more, we have loads of great information with deeper education about the current economic climate and a variety of other topics and terms on both our LinkedIn and YouTube.