Possible interest rate increases spark flood of calls for Windsor mortgage broker

Any time mortgage rates make news headlines, Rasha Ingratta said her firm gets flooded with calls.

This week, the Bank of Canada has decided not to raise its benchmark interest rate, although some experts say that will happen this year.

Ingratta, who is a mortgage agent with Mortgage Intelligence in Windsor, has been telling her clients not to worry because rates typically go up in small increments.

"We do this every day, so we take it for granted that we know this is not a big deal," she added.

The Bank of Canada kept its rate at 0.25 per cent, the same level it has been for the last 670 days. That rate influences the prime rates set by financial institutions for lines of credit and mortgages.

"Everybody has been enjoying that rate because it's been very, very low," said Ingratta.

Currently, the prime lending rate is 2.45 per cent.

Hypothetically, she said, if the rate were to rise to 2.75 per cent, that would be a relatively small monthly increase for a mortgage. For example, on a $450,000 mortgage using that scenario, the monthly payment would be $1,851 per month, up from $1,788 — an increase of $63 or 3.5 per cent.

To let her some of her more than 3,000 clients know when they should be worried and when they shouldn't, Ingratta started a private Facebook group to offer her advice if there's talk of rates changing. 

These low rates are forecasted to bump back up to pre-pandemic levels by April of 2023, according to David Boyd, senior investment advisor with BMO Nesbitt Burns in Windsor.

That means a possible incremental rate increase of 1.5 percentage points, since the Bank of Canada rate was 1.75 per cent before the COVID-19 pandemic.

The reason for such a big drop, Boyd said, is that the Bank of Canada was trying to stimulate the economy.

Now, the rationale for raising the rate once again is to ensure "the economy doesn't overheat with inflation," said Boyd.

"If you haven't reached to far on your mortgages, on lines of credit and other forms of debt than it should be affordable," said Boyd.