Page 33 - Sports Energy News, Cornwall, Issue No 127

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Johnson - Continued from page 32
“If you’re a variable-rate holder
and your mortgage was at
prime – 1% last year, you were
paying $397.39 (per $100,000
of mortgage).” “Now, you’re
paying $651.74 on a 25-year
mortgage, a difference of $254.35
(64% increase), and on a 30-year
amortization your difference is
$264.86, a 77% increase.”
Given an average mortgage size
of roughly $312,000, according
to figures from Equifax, that
translates to roughly $820 more in
interest each month for the average
borrower.
Despite the sharp rise in borrowing
costs as a result of ten Bank of
Canada interest rate increases,
variable-rate borrowers have so
far been “extremely resilient.”
For example, some borrowers
have locked into a fixed rate early,
while some have refinanced to
extend their amortization and
decrease their overall payment,
while others who may have used
funds to invest in the stock market
or other investment vehicles have
deleveraged by reducing their
overall mortgage and/or debt load.
Essentially, they’ve done whatever
it takes to create some level of
predictability and management of
their monthly cash flows. What we
have not seen to date is property While the Bank of Canada has If there was an offensive attack Saka
owners selling their properties signaled that any future moves
because they can’t manage the will be heavily dependent on
payments.
Trigger rates and extended
amortizations
The increases have led to higher
monthly payments for those
with adjustable-rate mortgages.
The Bank of Canada estimates
these borrowers have seen their
payments surge more than 50%
as of May—prior to the last two
rate hikes. But those with static- economist Andrew
payment variable-rate mortgages wrote last week.
are facing another kind of problem.
Fixed-payment variable rates,
which are offered by banks such
as TD, BMO, and CIBC, mean
the borrower’s monthly payment
remains the same, while the portion
going towards interest costs rises
and the amount going towards
principal reduction decreases.
This has resulted in the average
being Thunder Rolls to
amortization period
extended, in many cases to beyond
35 years, which has caught the Championship Final
attention of regulators.
As of May, prior to the last two
Bank of Canada rate hikes, a report
from Desjardins estimated that
more than three quarters of these
borrowers had already reached
their trigger point, meaning all
of their monthly payments were
going towards interest costs.
The payment shock for these
borrowers will come as their
mortgages come up for renewal,
when their banks will adjust their moniker “Thunder” for Akwesasne’s
monthly payments to get them Junior B lacrosse team. There were
back on their originally contracted
amortization schedule.
Could prime rate reach 7.45%?
What could start to really wreak
havoc on current variable-rate
mortgage holders are any further
hikes beyond this point.
economic data that comes out in
the coming weeks, some believe an
additional quarter-point rate hike
in September remains possible.
“The continued hawkish tone
within [the Bank’s] statement also
suggests that another move could
well be seen in September, although
we suspect that this will ultimately
prove to be an overshoot,” CIBC
Issue #127 August 2023 33
Issue #127 August 2023
33
Grantham back to target” than the Bank
currently projects.
For the Bank of Canada to feel An additional rate hike would
compelled to deliver yet another bring the overnight target rate to
quarter-point hike at its September 5.25%, implying a prime rate of
meeting, Grantham says the 7.45%. The last time Canadian
economy will have to under- borrowers saw prime rate that high
perform compared to the Bank’s was in 2000.
latest forecasts, and inflation will THANKS FOR KEEPING
have to “make quicker progress BUSINESS LOCAL
you the goaltender is the club’s MVP.
Up front, Hawi Francis leads a talented
group, and when the tall forward is on,
he can be unstoppable. The Thunder
dispatched the always-tough Clarington
By Thom Racine
Green Gaels in three games, winning the
first round series and earning a date with
defending National Champion Nepean
Knights. The hard-fought series went
to the Thunder, roaring to an overtime
victory in game four. The eastern final
ou can use all of the stormy cliche’s saw the Thunder beat Orangeville in four
Yavailable, but it truly has been a games, (although they never lost with
thunderous first season under the new Orangeville’s win coming after a protest
in game one; the Thunder had used what
some early setbacks and win-one lose- was deemed to be an illegible player,)
one efforts, but as the season rolled to win the Colby Hancock Memorial
along, the Thunder got louder and Trophy, and that has set up an Ontario
Junior B championship series with the
louder. Midway through the season, the Six Nations Rebels, with a trip to the
500 team began to believe in themselves Founders Cup on the line. The Thunder
and played a more disciplined style,
while never giving up their end of the will play game three at home on Sunday
floor. Stout defence and a punishing August 6th, and Monday August 7th if
style kept would-be attackers at bay. necessary. The two teams are evenly
matched, and it should be a great series.
After the season it has been, don’t count
Thompson was absolutely stellar in out the Akwesasne Thunder to keep on
goal. In fact, most observers will tell rolling….