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BANK OF CANADA INTEREST RATE HIKE: THE HARSH REALITY WHY CANADIANS FEAR INTEREST RATES GOING UP

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Bank of Canada interest rate hike: Introduction

Unfortunately for many Canadians, their fears are about to be realized. On Wednesday, January 17th the Bank of Canada interest rate hike began. The Bank of Canada raised its key lending rate by a quarter percentage point to 1.25%. This is the third time it’s moved its benchmark rate from once-record lows last summer.

Bank of Canada interest rate hike: How will changes in the prime lending rate affect Canadians?

Changes in the prime lending rate affect variable-rate mortgages, lines of credit and other lending linked to the benchmark rate, and this means that borrowers will be paying more. And the Bank of Canada interest rate hike has a ripple effect.

The Royal Bank of Canada raised its prime lending rate by a quarter of a percentage point, to 3.45%, effective Thursday, January 18th. Canadians expect that Canada’s other big banks will do the same. Already all of Canada’s Big Six banks raised their listed five-year mortgage rates by 15 basis points to 5.14%.

It’s now going to be more difficult for home buyers to qualify for mortgages, particularly with the new stricter guidelines. As you can see, a rise in interest rates can have far-reaching effects.

Bank of Canada interest rate hike: Reasons Canadians are concerned

With so many Canadians walking a financial tightrope, the last thing they wanted to see was an increase in interest rates. A recent survey by Ipsos showed that:

  • 48% of Canadians are within $200 of not being able to meet their financial obligations
  • 40% of Canadians worry that they’ll be in financial trouble if interest rates keep rising
  • 33% of Canadians can’t keep up with their monthly bills and make their debt repayments
  • 30% of Canadians are concerned that rising interest rates could push them close to bankruptcy

Bank of Canada interest rate hike: Are you worried about the interest rate hike?

If you’re like many Canadians who worry that the rise in interest rates will push you over a cliff financially, now is the time to seek professional help. A licensed trustee can give you answers, options and a realistic plan for recovery.

Contact Ira Smith Trustee & Receiver Inc. We’ll evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. Give us a call today and Starting Over, Starting Now you can be on your way to debt free living.

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Brandon Blog Post

INTEREST RATES IN CANADA: ARE YOU WORRIED THAT HIGHER INTEREST RATES WILL CAUSE YOU UNDUE FINANCIAL HARDSHIP POSSIBLY CAUSING BANKRUPTCY

bank interest rates canada

Interest rates: Introduction

Canadians have been on a borrowing binge due in large part to very low rates. But, the tide is beginning to change and interest rates, although still low, are beginning to creep up. This rise in rates is making many Canadians very nervous. For some, it could cause serious financial hardship.

Interest rates: The threat of rising interest rates

Forum Research Inc. conducted a survey after the Bank of Canada raised rates in September and the results are quite interesting:

  • 60% of young people are at least somewhat concerned by the prospect of rising rates
  • Over 50% of Canadians think that rising rates will negatively impact their personal finances
  • 35% of Millennials aged 18 to 34 have no savings at all
  • Only 26% have an emergency fund
  • 12% expressed concern that more rate hikes were on the way and that the impact would be extremely negative

Interest rates: “It was almost like money was free”

In theory, higher interest rates should provide an incentive for Canadians to save more, but the long period with low rates have taken their toll on many. “Rates were so low for so long, it was almost like money was free,” said Forum Research president Lorne Bozinoff in an interview. “Some may have overextended themselves during that time, thinking rates will never go up.”

Interest rates: How will you cope with higher interest rates?

The question now is how will Canadians cope with higher rates? “Some households might not be able to afford an increase,” says Frances Donald, senior economist with Manulife Asset Management. “And this is where we can see defaults, first on auto loans and then on housing.”

Interest rates: Are you worried about defaulting?

Are you worried about defaulting on your loans or mortgage? Are higher rates causing you financial hardship? There’s no time to waste. Contact Ira Smith Trustee & Receiver Inc. today.

We approach every file with the attitude that your financial problems can be solved given immediate action and the right plan. Together we will explore with you all the bankruptcy alternatives available to you. I know that we can help you get back on solid financial footing, the same way we have helped many others just like you, Starting Over, Starting Now.3bestaward

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