Some good news again today for variable-rate mortgage holders. The Bank of Canada has once again decided to leave their target overnight interest rate at 1.25%. This is typically the interest rate that will influence lender's prime rates, and therefore variable-rate mortgages and other floating rate credit products.

What this means is that if you have a variable rate mortgage, you can expect your payments to remain the same for now. Economists are predicting that there is a good likelihood of a rate increase at the next BoC meeting on July 11th though, so mark your calendars and keep an ear open for the news at that point. 

If you're in a variable-rate mortgage your lender will let you know any time there is a change to prime rate. Typically lenders will allow your next payment after a rate change to remain the same as you're used to, and then will increase the payment following that accordingly.

On a typical mortgage of $350,000, a rate increase of .25% (the amount BoC will usually raise or increase rates) equals a monthly payment difference of $35. The question to ask before panicking about rates rising is: 'Can I handle a $35 a month change to my finances?"; most people will answer yes. If your answer is no, then we should sit down and discuss the options to lock in your variable rate or convert it to a longer term fixed rate for payment security.

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