Bank of Canada Rate Increase
As many predicted, this morning the Bank of Canada announced that it is increasing the overnight lending rate by 0.50% in an effort to control the soaring inflation rate.
What does this mean for the Canadian consumer?
Expect Banks and Lenders to follow by increasing their prime rates by the same margin. This affects Variable mortgage rates as well as rates on lines of credit, and credit cards, which will set off higher monthly payments.
For those with a Variable mortgage, the discount spread is likely still lower than the Fixed mortgage rate. To mitigate the risk of rising rates, you can top up payments to take advantage of the savings now which also helps to pay down your mortgage faster. Or locking into a Fixed mortgage may be a better option depending on your situation.
This increase could make monthly cash flow tight for some. If you have equity and are already financially stretched, it's time to look at a refinance. I can help.