Of Prime Interest: New government impact on interest rates

We will have a wait and see attitude as to where interest rates are headed.

  • Nov. 16, 2015 8:00 p.m.

We know our new Liberal government plans on spending a plethora of funds for infrastructure and various other projects to get the economy going in full swing. We also know the government plans on running deficits during its tenure in office.

What we aren’t sure of is where interest rates are headed in the near future. There is a close watch on U.S interest rates. According to what we’ve been reading, the American economy is starting to heat up and there have been indications they are looking at an interest rate hike as soon as December of 2015.  We always hear of potential interest rate hikes by them but a lot depends on how brisk their economy is. As we know our economy relies heavily on our neighbours to the south and the Asian markets for our exports.

Canadian mortgage rates have crept up but indications so far are that there may not be any movement in the Bank of Canada interest rate until potentially 2017, but that is not a given.

Again this is from information that comes across our desks on a frequent basis. We monitor closely the future forecasts for where economists feel interest rates are headed. As with any forecasts, interest rates can vary up or down but what we do know is eventually mortgage rates will increase. For those looking for a mortgage to refinance, renew or purchase a home, interest rates are still historically low.

Due to the volatility of mortgage rates, you can ensure comfort by locking into a mortgage. If you decide to take a five-year mortgage you will be able to predict what you will be paying for the next five years. This will allow you to budget easier knowing what your monthly expenses are. Should you decide to prepay your mortgage you are allowed to pay anywhere from 10 per cent to 20 per cent once each year without penalty and also increase your payments by up to that same amount. We also know that an existing mortgage can be “ported” to another property without penalty.

In the case of a variable rate mortgage we do know you can have an interest rate below prime, with prime currently at 2.70 per cent. Rates will follow the lender’s prime rate up and down but again, we know eventually prime will increase, depending on the bond market, etc. For example if the lender’s prime rate goes up by 1.00 per cent so will your variable rate mortgage. That would mean if you had a variable rate currently at 2.25 per cent that would increase to 3.25 per cent, which is approximately 0.50 per cent higher than current five-year closed rates.

We all have to carefully watch the media to see where we are heading interest rate-wise. Again we have a new government in place and based on their platform we will have a wait and see attitude as to where interest rates are headed.

Just Posted

Okanagan can learn from Washington’s wine industry growth

Winery owner cites importance of industry collaboration

Okanagan wineries shine in global chardonnay competition

Recognition for Kalala and Liquidity wineries at 2018 Chardonnay du Monde competition

Kelowna’s South Perimeter Road project to go ahead

Project to extend Gordon Drive doesn’t get enough signatures to keep it from moving ahead

Fleeing driver leaves behind severely damaged car

West Kelowna crash occurred at Highway 97 South junction

Dozens of impaired Kelowna drivers ticketed on St. Patrick’s Day

Kelowna RCMP stopped many vehicles for impaired driving during a one day blitz

Rainy week ahead for Okanagan and Shuswap

Environment Canada is forecast rain for the next three days, starting Tuesday afternoon

Attempted gun smuggler across the Osoyoos border sentenced

Alex Louie, who prefers the name Senk’lip, was sentenced to the mandatory minimum

Pro-Trump protest sign with F-word is OK, court rules

Judges say Ontario man can protest publicly, even using vulgar language

VIDEO: Police officer looking for distracted drivers gets hit by truck

Road safety investigator clipped by trailer while patrolling busy intersection

YVR wants you to help name three new puppies

Say hello to the Vancouver Airport’s new assistance pups

Search and rescue help injured sledders off Owlhead

Volunteer searchers also locate two hikers near Little Shuswap Lake

Suspect who attacked autistic man in Ontario could be from B.C.’s south coast: police

29-year-old man was sent to hospital with serious injuries

Privacy watchdog to explore Facebook leak

Canadian expert says his analytics company helped Trump campaign capitalize on private Facebook info

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Most Read