On September 6th, the Bank of Canada implemented its second rate hike of the summer. We must assume it’s only the beginning as the Canadian economy has been doing quite well. Essentially, rising interest rates is the main option for the Bank of Canada to keep inflation under control in booming economic conditions.
As a result, Canadians can expect borrowing costs to get higher. In that context, the principal preoccupation of many house owners is having to pay more for their mortgage.
So, what can we, simple mortals, can do about it?
Stay calm as you probably have time to adjust
Stay calm! There’s nothing critical yet. First, significant hikes won’t happen overnight and will be gradual. Second, effect may not be that immediate so you still have time to prepare for adjustments. Online mortgage calculators can allow you to anticipate eventual increase of your payments.
For very popular fixed-rate mortgages, payments won’t be affected till renewal. Many variable-rate mortgages involve fixed payments also only affected at renewal. You’ll end up paying more interest and your balance will accordingly be a little higher.