if they raised the benchmark interest rate next week presumably the big effect will be on the prime rate and that will that will increase the rate for millions of variable mortgage borrowers yeah the most immediate impact andrews gonna be on anyone who currently has a variable mortgage rate or a home equity line of credit their rate will go up right away and then their mortgage payment will go up in february and the minimum payment on their home equity line of credit will go up as well so yeah anyone in a variable rate or any type of floating rate debt theyre going to feel the effects immediately anyone in a fixed rate their rates are not going to change until their next renewal so they should look forward to whenever that next renewal date and start to budget in the higher rates that are to come of course thats the beauty of the fixed rate you know what youre paying but fixed rates theyre more tied to longer term bond yields arent they yeah more tied to longer term bond yields now the bond yield is up to its pre pandemic level were right at about where we were january 2020 before we do any of us had heard of covid so we fixed rates are on the way up as well now i think im in the minority im not positive that the bank is going to move up next week im more anticipating that they may hold and that theyre going to tell us theyre going to move up at their next announcement in march largely because covid persists economic activity is still below pre pandemic levels and their last announcement wasnt that long ago which was december when they told us that the earliest they plan on moving is april so im expecting theyre going to move that guidance forward to march but im going to stick my neck out and be part of the minority who says that theyre going to hold next week but tell us theyre going to move up quicker and march so you reckon the bank could well be like one of those dogs next week that barks on baraks but doesnt actually intend to bite you thats thats thats what im thinking i think that im expecting still two to four rate increases throughout the year but i expect the first one i wont be surprised if they move it up next week but on the balance of probabilities im going to say march as opposed to next week now give us a bit of perspective here because in recent years the variable mortgage has become a much bigger part of the market it has especially this year you know right now we still have prime minus one point six percent avail available which which is a net rate of zero point eighty five percent its its the lowest its ever been sorry i mean with inflation pardon me sorry you said a negative net raise on variable mortgages right now we have a variable rate at prime minus one point six percent so prime ise one point six primes at two point four five so the net rate that a borrower pays right now is zero point eighty five percent and thats the lowest its ever been and so so thats been very popular through the summer and people are looking and theyre saying you know what the comparable fixed rate that i could get is about one point five percent higher so thats six quarter point rate increases by the bank of canada before my rate would be equal to the fixed rate that i cac that i could get today thats why even in the face of a rising rate environment the variable continues to be popular even even this week we have people taking new variable rates now you know people are considering locking in but many are saying you know what my strategy with this mortgage was to get the variable stay with it for the entire 20 or 25 years that has been the cheapest way to finance your mortgage historically and people save a lot of money with the variable over the years so theyre saying you know im not going to abandon it now so people are getting a variable mortgage right now people are paying only i think he said point eight five percent right eight yeah thats thats the lowest available thats for high ratio borrowers but yeah theres variable rates across the board are thats the lowest in the country at zero point eighty five percent so theres still so cheap so even though everyone agrees even variable rate holders agree that rates are going to go up this year but many are still holding and even new borrowers are still seriously considering their variable rate its not appropriate for everyone it carries more risk so you definitely need to be a household who can handle a little bit of fluctuation in your mortgage payment but the quicker youre going to pay down your mortgage as well the more a variable rate is appropriate because your mortgage balance begins at the highest and if youre paying it down quickly its less material what the rates are going to be in year four or five once rates have moved up further whats interesting is that our latest inflation rate in this country four point eight percent so youre paying negative in real terms youre being paid to take out a mortgage i suppose yeah yeah its you know with the inflation rate where it is its being able to get something at less than 1 percent for your mortgage rate is just you know its its pretty close to free money and so its its attracting a lot of people