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The Bank of Canada (BOC) has raised the prime rate by another .25%. This was expected and by all accounts we can expect them to continue to raise the prime rate as we have been predicting.
 
If you read the Press Release below you will notice that they have increased the time frame for when they expect the Canadian economy to be back on track. They now predict this will happen in the last quarter of 2011. 
 
It is expected that the BOC will continue to move the prime rate up over the next 12 to 24 months if everything continues as it has and no further worldwide issues prop up.   
 
So what should you do?
 
The best advise has remained the same and will continue to do so. Pay off as much of the mortgage as you can with any extra savings you have. If you are looking at locking in the rate then your payment will jump up to the current 5 year fixed rate so why not budget for that payment right now and apply the difference from your current payment and the new payment to the mortgage balance.
 
By doing this now you will prepare yourself mentally for the budget change and you will be now making those extra payments on the principle therefore saving thousands in interest with every quarter that goes by. If you stick to this type of budget you can be a lot further ahead when the time comes to lock in rates.  
 
This blog content courtesy of Daryl Marsden, Canada Mortgage Direct
 

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