A lot of chatter about rate hikes in 2022, the narrative seems to change week to week, however let’s assume rates will not stay this low forever.
The common and logical line of thinking is that when banks raise their prime rate homeowners with variable rate mortgages will see their monthly payments increase based on the increase in prime rate.
What happens to the monthly payment varies on which financial institution holds your variable rate mortgage.
BMO, TD, & RBC’s variable mortgages do not increase the monthly payment if the prime rate goes up unless you hit your “Trigger Point Amount”. In other words, depending on the bank and Trigger Point Amount criteria, unless interest rates have increased to the point where your payment is no longer covering the interest + deferred interest your payment will stay the same even if we see moderate rate hikes.
On the other hand, CIBC, Scotiabank, National Bank, and monoline lenders (mortgage only lenders – not banks) all increase your payment as prime increases.
