The Bank of Canada is widely expected to boost it’s benchmark rate tomorrow by 1/4%, which will lift rates on variable mortgages and lines of credit accordingly.
CIBC says there’s a 75% chance they’ll raise again within three months, based on historical data. C.D. Howe’s Monetary Policy Council also believes rates will continue rising.
It would take a 1% rise in rates, however, to start revealing “cracks” in Canada’s economy, according to CIBC economist Benjamin Tal. Nonetheless, if you’re debt-heavy (but have equity in your home) the Gazette writes that now is the time to refinance your mortgage and consolidate that debt.
Laurie Campbell from Credit Canada advises consumers considering a variable rate mortgage to “plan in advance for what size of rate increase they could afford and create an ’emergency plan’.”
While many expect the soaring Canadian dollar to curtail further rate hikes (due to export weakness and manufacturing woes), so far it’s had virtually no adverse effect on Canada’s overall economy or employment rate. CIBC says, “Canada’s trade surplus is as large today as it was five years ago when the dollar was trading below 62 cents American.”
Sources: Globe & Mail, Montreal Gazette, The Province, CIBC World Markets
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