There was good news for those who are buying a house in the near future in Collingwood, Blue Mountain, Wasaga Beach, Clearview, Grey Highlands and Meaford. In it’s announcement on the 17th of July, the Bank of Canada held it’s overnight rate target at 1%. This rate has been held for almost 3 years, and is contributing to record low interest rates for residential mortgages.
Read the full announcement by new central bank’s Governor Stephen S. Poloz, here.
Let’s have a look at what even a modest increase in interest rates might do to your mortgage payments, and interest paid over the life of the mortgage:
|Interest Rate||Monthly payment-per $100,000 of Mortgage, 25 Year Amortization*||Total Interest**|
|2.99%||$ 472.73||$ 41,819.78|
|3.99%||$ 525.48||$ 57,643.47|
|4.99%||$ 581.04||$ 74,310.75|
|*Canadian Mortgage: calculated semi annually, not in advance and paid monthly|
| **Calculated based on this interest rate over the 25 year amortization.
All figures obtained through use of CMHC’s mortgage calculator.
The central bank’s next overnight rate announcement will be on September 4, 2013.
The moral of this blog post is: if you’re going to be financing a residential home purchase in the next few months, get pre-approved right away, so you can lock your interest rate while they are at record low levels.