July 18, 2018

What the Bank of Canada rate hike means for your mortgage and savings account

Canada’s strong economy has prompted the central bank to up its interest rate by .25, making the overall rate 1.5 percent. The quarter of a percentage point increase proved to be a cue for Canada’s other primary banking institutions, which intend to follow suit. The bump is concerning to those Canadian households with high debt loads as variable rate-mortgage owners’s interest payments will rise as a result of the rate increase. However, there is a plus side for savings account owners as rates improve.

Key Takeaways:

  • The Bank of Canada’s decision to up the interest rate .25% to a total of 1.5% is reflection of Canada’s current economic stability.
  • The rate hike will mean higher borrowing costs for those with a variable-rate mortgage.
  • Canada’s highest profile banking institutions are upping their prime rates too, so savers should see some positive movement.

“Rates are slowly on the way up, but remain relatively low historically. On balance, it’s still probably a positive for the average household, for the average business.”

Read more: https://business.financialpost.com/real-estate/mortgages/boc-rate-hike-means-higher-costs-for-variable-rate-loans-but-better-returns-for-savers

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