The Bank of Canada recently raised it's benchmark interest rate to 4.5%, which will have an effect on those with variable rate mortgages.

Amanda Leibel, Member Relationship Specialist at the Weyburn Credit Union, said that in 2022 they saw prime rate increase 3.75%, which has had a negative effect on variable rate mortgage holders, and Weyburn is no exception.

She continued, "This, in turn, is making people's budgets tighter, especially when you factor in other increased expenses like fuel, food and general living expenses." 

How does this increase affect people with variable rate loans or mortgages?

"Payments need to increase in order to continue to reduce the principal over their intended amortization period," Leibel said.

"Anyone with variable rate loans and mortgages will see higher rates and therefore, either payments must increase, or less will be applied to principal, lengthening their term."  

Once inflation is under control, Leibel said that we should see rates start to decrease, "however, nobody really knows when this is about to happen."

For those with a variable rate mortgage, she said that "it may be in their best interest to convert those loans and mortgages to a fixed-rate term to keep their payments manageable."

Leibel suggested that those with any questions about their variable rate mortgage, should speak with their account relationship manager, who will review their individual financial situation and provide the best options to ensure their financial wellness.