The May inflation rate has just set a record that we have not seen since 1983, which was a rate of 7.7%. Up almost a full percentage point since last month when it was 6.8%. Yes we expected it to be above 7% but not by this much.
The biggest contributor to the increase was the price of gas, which was up 48% compared to a year ago. Increased fuel costs put upward pressure on so many things from food, flights, lumber and any other product that gets shipped is now up as a result.
The next step to help cool the sky high inflation is for the Bank of Canada to increase the rates again. The next meeting is in July and this what I fully expect them to do. The US federal reserve recently announced an oversized rate increase of 75 basis points and this is not out of the realm of possibility for the Bank of Canada at the next meeting.
So what do you do if you are still on a variable rate mortgage. Well the fixed rates have now risen to a point well above the current variable rate and the rate for a 5 year terms is now above 5%, starting at 5.09%. With prime currently at 3.70 and most people at prime -1%, so even if prime increases by 75 basis points the smart at math say to just ride it out and that is what I am going to do. You may decide differently that that is up to you.
I look forward to hearing from you in regard to your mortgage needs.
p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).
p.s.s.s You can download my new mortgage app here