What a Bank of Canada Rate Hike Means for Mortgages

The video discusses the impact of changes in the prime rate on variable and fixed mortgage rates, highlighting the immediate effects on borrowers with variable rates. It compares fixed and variable rates, noting that fixed rates are tied to long-term bond yields. The video also explores market trends and predictions, emphasizing the popularity of variable rates despite rising interest rates. Finally, it discusses strategies for managing variable rate mortgages, considering inflation and financial planning.

What is the immediate effect of an increase in the prime rate on variable mortgage borrowers?

• Their mortgage payments decrease.

• Their mortgage payments remain the same.

• Their mortgage payments are unaffected.

• Their mortgage payments increase.

How are fixed mortgage rates primarily determined?

• By the stock market performance.

• By the prime rate.

• By short-term interest rates.

• By longer-term bond yields.

What is the expected number of rate increases throughout the year according to the minority opinion?

• Two to four

• One to two

• Six to eight

• Four to six

Why have variable mortgages become more popular recently?

• They are unaffected by economic changes.

• They offer a fixed interest rate.

• They are tied to the stock market.

• They currently have a very low interest rate.

What is the current net rate for a variable mortgage at prime minus 1.6%?

• 3.0%

• 1.5%

• 0.85%

• 2.45%

What should households consider when choosing a variable mortgage?

• Their ability to handle payment fluctuations.

• The fixed rate they can secure.

• The length of their mortgage term.

• The color of their house.

How does inflation affect the real cost of a mortgage?

• It has no effect on the real cost.

• It increases the real cost.

• It decreases the real cost.

• It doubles the real cost.