Bank Of Canada Interest Rates May Not Automatically Trickle Down
May 5, 2008
If you have a credit card or rely on credit to finance any kind of purchase – from car loans to home mortgages, refinance loans and more – listen up because the rules may be changing.
In the past when the Bank of Canada lowered the prime rate it automatically had a trickle-down effect on other loans, meaning if the prime rate fell by a quarter or a half a percentage point, the rate you could expect to pay would fall – or rise – to correspond with those changes.
So what’s fueling this change in the way the credit game gets played?
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4 Important “W’s” of the Adjustable Rate Mortgage
May 2, 2008
The current mortgage meltdown in the United States has given the adjustable rate mortgage a black eye. Used properly, it can be a smart way to use money to your advantage. Here’s the breakdown on the ARM and how and when to use it without hurting yourself.
What – The adjustable rate mortgage is a form of financing that has fallen out of favor as of late. Instead of getting an interest rate that stays the same throughout the life of the loan, the ARM adjusts – or changes – periodically depending on current market conditions. It can be adjusted upwards or downwards (usually on a quarterly basis) depending upon what direction the rate the loan is based upon moves. If you get an ARM loan and interest rates go up, your payments can increase – sometimes dramatically. By the same token, if they fall, your payments will fall. Most lenders have a clause in your contract that sets a ceiling on how far or how fast your rate can increase. If you have bad credit, your lender may have a floor interest rate built in that says your interest rate will never drop below a certain level, regardless of how low interest rates get.
