The Chui family purchased a condominium for $229,000. They financed 75% of the purchase price through their local bank at a variable interest rate over 20 years.

a. Although their rate was variable it remained unchanged for the first 21 months of the amortization period at 3.25% compounded semi-annually. What was the size of their monthly payment for this time?

b. What was the balance owing on the condominium at the end of the first 21 months?

c. Twenty-one months in to their mortgage, the Bank of Canada decreased the lending rate and the variable rate decreased to 2.85% compounded semi-annually. By how much will their payment decrease?

AppendixLO1