A Vancouver mortgage broker is advising homeowners to anticipate a change in their monthly mortgage payments in the wake of a possible Bank of Canada (BoC) interest rate hike next week.
Angela Calla, a mortgage expert and the Dominion Lending Centres host of The Mortgage Show on CKNW AM980, said the average Canadian would have to pay roughly $50 more per month. However, she stressed that those who already have higher interest rate mortgages are in a better position to manage the increase.
While interest rates are likely to begin climbing, Calla expects the growth to be gradual, emphasizing that there’s no need for homeowners to panic. She’s confident because the federal government has told Canadians to prepare for this increase for years, which should soften any financial blow.
“Even if you have a million-dollar mortgage you can expect that payment to go up $150 a month. We’ve been talking about interest rate hikes for seven years. So psychologically [many people are prepared],” she said.
Calla advises homeowners whose mortgages are coming up for renewal to find solutions a few months in advance.
On the other hand, other experts warn that the hike would spell trouble for some Canadians.
“I think there will be some very difficult situations out there,” said Blair Mantin, a licensed insolvency trustee with E. Sands and Associates Inc. “You can imagine if rates go up a quarter point or a half point … that’s a massive increase in folk’s monthly mortgage [payments].”
Mantin said the prudent course of action would be to examine one’s budget now rather than later. He also suggested setting up an emergency fund to cover any rate increase.