\nDepending on the mortgage product chosen (insured, conventional, …), you will get a discount on this rate (for example\u00a0Prime Rate\u00a0– 0.80% or 4.65%). However, this is not always the case. Sometimes there are rate increases, for example 5.45% + 0.05%.
\nThis rate may fluctuate depending on the Bank of Canada’s\u00a0prime rate.<\/p>\n
![\"which-rate-choice](\"https:\/\/hypotheques.ca\/staging\/wp-content\/uploads\/2023\/03\/6336fa11dcb871073c90f142_quel-taux-choisir-_.jpg\")
<\/div>\n<\/figure>\nCapped variable rate<\/h4>\n
A capped\u00a0variable rate mortgage\u00a0is a loan that you pay with a rate that fluctuates with the market without ever exceeding the established cap.<\/p>\n
This option allows you to take advantage of rate decreases, while protecting you from\u00a0interest rate\u00a0increases.<\/p>\n
Variable rate: often the most advantageous<\/h3>\n
Many economists believe that the variable rate is more advantageous in the long\u00a0term\u00a0than the fixed rate. In addition, with a variable rate, the\u00a0penalties are lower in case of breakage of the mortgage\u00a0during the\u00a0term. However, we encourage you to contact our mortgage brokers who will advise you based on your financial situation, the current economic situation, and your risk tolerance.<\/p>\n Some banks offer a fixed monthly payment option with a variable rate:<\/p>\n By opting for fixed payments with a variable rate, you will certainly have fixed payments but rate fluctuations will impact the balance due at the\u00a0end of the term, and the\u00a0duration of\u00a0the amortization.<\/p>\n It is possible in case of an increase :<\/p>\n The fixed rate is a rate that remains the same throughout your mortgage contract with your financial institution, over a chosen\u00a0term of\u00a01, 2, 3, 4, 5, 7 or 10 years.<\/p>\n By opting for a\u00a0fixed rate mortgage, you commit to making identical payments according to the payment frequency you choose (monthly, bi-monthly, bi-weekly, weekly, etc.)<\/p>\n \u200d<\/p>\n Blended rate allows you to combine your variable mortgage rate for one portion of the loan with a fixed rate portion for another.<\/p>\n The blended rate is suitable if you want to dilute the impact of rate increases on your payments<\/strong>.<\/p>\n There are several factors that will drive mortgage rates in 2022 – 2023.<\/p>\n Fluctuations in variable mortgage rates depend on your bank’s\u00a0prime rate, which in turn depends on the Bank of Canada’s\u00a0key interest rate. The\u00a0key rate\u00a0was increased again on September 7 to\u00a03.25%<\/strong>, bringing the\u00a0prime rate\u00a0to\u00a05.45%<\/strong>.<\/p>\n The\u00a0prime rate\u00a0is the basis for calculating mortgages at 5.45% and for which\u00a0economists are announcing additional increases of 2% in the coming months<\/strong>. Fixed mortgage rates are dependent on Canadian bond rates, which fluctuate with the financial markets.<\/p>\n In the event of a rate increase, you have several options:<\/p>\n Another factor to consider when choosing your rate is the amount of down payment you bring in. Ask your\u00a0mortgage broker\u00a0for advice!<\/p>\n Another factor to consider in your choice is the economic situation. With inflation due to the various political and economic conflicts, the\u00a0key rate\u00a0is only increasing to compensate for this inflation. Currently, the\u00a0key rate\u00a0is\u00a03.25%<\/strong>\u00a0with a\u00a0prime rate\u00a0of\u00a05.45%<\/strong>.<\/p>\n The variable rate is dependent on the Bank of Canada rate. It is best to have a\u00a0mortgage broker\u00a0accompany you in your choice of rate.<\/p>\n In order to make your choice for your rate, you must also take into account the objective of your real estate purchase. Do you want to buy a new property to live in or for rental investment purposes? We advise you to contact one of our brokers who will help you choose between the fixed and variable rate.<\/p>\n We advise you to carefully evaluate your financial situation, your risk tolerance and your priorities.<\/p>\n If you prefer to have financial stability,<\/strong>\u00a0we advise you to opt for a fixed rate.<\/p>\n If you want to limit mortgage\u00a0penalties<\/strong>, and you think rates may go down, we recommend that you choose a variable rate.<\/p>\n However, every situation is different. The best thing for you to do is to discuss it with one of our mortgage brokers to determine which rate is best for you.<\/p>\n\n
\nHowever<\/strong>, since 2022, and due to the economic situation, the Bank of Canada has proceeded to several increases in its rate, and economists expect increases to counteract inflation.<\/p>\nIs it possible to make fixed payments with a variable rate?<\/h3>\n
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\nThe lender may adjust the mortgage payments.<\/li>\n<\/ul>\n\n
![\"calculate-a-rate\"](\"https:\/\/hypotheques.ca\/staging\/wp-content\/uploads\/2023\/03\/6319004499b105d5afe2719e_calculer-taux-endettement-1.jpg\")
<\/div>\n<\/figure>\nThe Variable rate is suitable for you if:<\/h3>\n
\n
What is a Fixed Rate?<\/h2>\n
The fixed rate is right for you if:<\/h3>\n
\n
Reimbursement<\/h3>\n
What is a blended rate?<\/h2>\n
Factors driving rates in 2022 – 2023<\/h2>\n
Variable mortgage rates<\/h3>\n
\nSo if the\u00a0prime rate\u00a0goes up, variable mortgage rates go up as well.<\/p>\n
\nThe reason for this increase is the Bank of Canada’s desire to counteract rising inflation.<\/p>\nFixed mortgage rates<\/h3>\n
![\"rate-in-2022\"](\"https:\/\/hypotheques.ca\/staging\/wp-content\/uploads\/2023\/03\/6336fa3d6b17cf2f0549d2a5_taux-en-2022.jpg\")
<\/div>\n<\/figure>\nWhat to do when fixed rates fall?<\/h2>\n
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What to do in case of a rate increase?<\/h2>\n
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Variable or fixed rate: Other factors to consider before choosing (in 2022 – 2023)<\/h2>\n
Down payment<\/h3>\n
Economic conditions<\/h3>\n
\nAn increase in the\u00a0policy rate\u00a0results in an increase in the\u00a0prime rate\u00a0and therefore an increase in the variable rate. Similarly, the fixed rate depends on the bond market.<\/p>\nMove in or rental investment<\/h3>\n
Variable or fixed rate: What to choose?<\/h2>\n