With the spike of interest rate increases the Bank of Canada is hoping for a soft landing to our economy instead of a recession. They want people to gradually slow their spending as rates increase so demand for products and services will decline and the prices of these commodities can reduce as a result.
That is the ideal result but it also fails to address the reasons for the inflation in the first place. Which most economists point to the supply chain issues caused by the pandemic and then with the Russian invasion of Ukraine which further jacked up fuel prices thus effecting the costs of anything that is shipped.
However there is a downside risk of a recession. This happens when there is a decline in economic activity from reduced spending and increased unemployment as companies costs dramatically increase as a result of higher costs of borrowing. If this happens then our famously low unemployment rate will increase rapidly and pulling us toward a recession.
One way to protect yourself is lock in your mortgage rate from fixed to variable. Doing this will automatically increase your monthly mortgage payment by about 1.5% as that is the difference between the variable rate discount and the current fixed rate. We all knew that the low rates would not last forever, just make sure that you understand all the risks before you make a decision.
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