The Bank of Canada’s latest interest rate hike means higher borrowing costs for consumers with variable-rate mortgages, loans or lines of credit, but it is also good news for savers and future homeowners.
The central bank increased its benchmark interest rate to 1.5 per cent, up from 1.25 per cent, marking the fourth increase over the last 12 months.
The decision will likely prompt Canada’s big banks to raise their prime rates, thereby passing on the rate increase along to their customers.
The Royal Bank of Canada said Wednesday it will increase its prime rate by a quarter of a percentage point to 3.70 per cent, effective Thursday.
The Credit Counselling Society’s president and CEO says a rate hike is positive for those with funds in a savings account, particularly seniors who depend on interest income to help cover their expenses.
Scott Hannah says higher interest rates have also helped to cool down the country’s real estate markets, helping future homeowners.
But Mortgages of Canada CEO Samantha Brookes says those with variable-rate mortgages will now face higher interest payments, a concern for many Canadian households that are already saddled with hefty debt loads.
By: The Canadian Press.
Photo: Yahoo.
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