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Category: Bank of Canada Interest Rate

  • Bank of Canada Prime Interest Rate Staying the Same for September 2018

    The Bank of Canada prime interest rate is remaining at 1.5% for September 2018.

    On September 5, 2018, the Bank of Canada (BOC) announced its decision to keep rates the same, referencing high gas prices, uncertain trade policies, and a stabilizing housing market.

    Canadian interest rates have increased four times since July of 2017, going from 0.5% to 1.5%. The last hike came in July of 2018.

    Interest rates affect all forms of non-fixed (variable) debt. This might include unpaid bills, lines of credit, variable-rate mortgages, and, of course, credit card debt.

    Credit card interest rates already tend to be very high — much higher than many loans. Added BOC interest rate increases would only bring that amount up more.

    Equifax Canada estimates that Canadians carry $599 billion worth of non-mortgage consumer debt, including credit cards, auto loans, and the like. They predict that the amount of delinquencies — people who can’t or don’t pay their debts on time each month — will increase by the end of 2018.

    Part of that prediction is based on a decline in the number of people who completely pay off their credit card bills each month. Even if you make the minimum payment every month, you will still be charged interest on the remaining balance.

    The September rate hold can give Canadians a chance to deal with outstanding debts — particularly credit card debt interest.

    Consider the following options for managing credit card debts, or other consumer loans, that you can’t pay off in full:

    • Seek a consolidation loan with a fixed-interest rate.
    • Don’t open up any more credit cards if you can’t pay the balances on existing ones.
    • If you have home equity available, consider using it to pay off outstanding debts.
    • Consider filing for a consumer proposal or filing for bankruptcy.

    At DebtCare, we can help you break free from your debt. We will assess your financial situation and make a plan to manage it before the next Bank of Canada prime interest rate increase.

    There is another BOC announcement scheduled for October 24, 2018. Many economists are predicting rates will increase again at that time.

    Don’t wait — get in touch with us before October 24.

    Call 1-888-890-0888 or visit www.debtcare.ca for a free consultation.

  • BOC Interest Rate Rises to 1.5%: Do You Need to Consolidate Debt?

    Canadian interest rates are at a new high. On July 11, 2018, the Bank of Canada (BOC) interest rate rose to 1.5%.

    This is still a relatively low interest rate, but if you’re struggling with debt it could mean trouble.

    Canadian interest rates affect floating, or unsecured, debt. This could be anything from credit card bills to variable-rate mortgages to certain lines of credit. If you have debt with a fluctuating rate that changes month to month, the BOC interest rate will likely affect you.

    At the start of 2018, Canadian household debt levels were at a record high. But since interest rates have increased, those debt levels have dropped. With higher interest rates and stricter mortgage lending guidelines, people aren’t able to take out as much debt. Plus, wages are up, which is also helping.

    But even as the interest rate increases are working to bring down Canadian household debt, debt levels are still high. If you’re struggling to make ends meet, you might be wondering how to consolidate debt.

    Debt consolidation can take all of your unsecured, outstanding payments — credit cards, lines of credit, etc. — and put them into one lump sum.

    With debt consolidation, you could:

    • Take out a loan with a fixed interest rate (that won’t change with BOC increases).
    • Use that money to pay off your other high-interest debts.
    • You would still need to repay that loan, but you would be able to plan for it.

    Higher interest rates can also affect mortgage refinancing and renewals. For instance, if you got your current mortgage rate five years ago and it’s now up for renewal, your lender may tell you that you have to renew at a higher rate.

    And any new debt you take out with a big Canadian bank may be higher. The raise to 1.5% is expected to encourage big banks to raise their prime lending rate as well, so it will be more expensive to take on new debt.

    If you can’t repay your current debt, your credit score will be affected, which will also worsen your financial situation.

    In any of these cases, debt consolidation, mortgage renewal, or wanting to take out new debt but not having the means to pay it off, DebtCare Canada can help. We have always provided independent advice to our clients, considered all their options and we then recommend only what is in your best interest.

    We specialize in offering financial help to people with all types of credit and income. In addition we are now able to provide you with first mortgages, second mortgages, debt consolidation loans, and much, much more.

    This BOC interest rate increase is only the beginning. Interest rates will be increasing further in the future, so don’t wait to get a handle on your debt.

    Contact us today to get started. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Will You Wait for the Canadian Interest Rate Surprise on July 11?

    Most years, July 11 is just another day. But in 2018 it could mean a change to the Canadian interest rate.

    The Bank of Canada has scheduled its next interest rate announcement for July 11, 2018. This is when they will publicly say if interest rates are going to increase again or not. If they do increase, unsecured debt will be affected. Could you handle a hike?

    If you’re not sure, it may be time to think about other options.

    One of those options might be mortgage refinancing. If you’re saddled with a lot of high-interest, unsecured debt, such as credit cards, student loans, or other consumer debt, refinancing your first mortgage could give you a lifeline out.

    Essentially, a first mortgage refinance would give you money based on equity available in your home. You could then use that money to pay off your outstanding, high-interest debts. You will then be left with a single monthly payment with a significantly lower interest rate.

    Even if you’re not struggling with debt, you may be considering refinancing your first mortgage for other reasons – perhaps there’s a home renovation project you’d like to undertake, or you’re planning for a big purchase, or you have a lot of equity available in your home and want to take advantage. Whatever the reason, if you’re considering refinancing, it’s better to do it now than after interest rates increase even further.

    Why would you want to refinance before an interest rate change? For one thing, if you’re on a variable-rate mortgage, you may want to lock into a fixed-rate mortgage so your payments won’t fluctuate with the interest rate.

    If you’re thinking about refinancing your first mortgage, doing so will get more expensive as interest rates rise, which means you could be saving less over the long run.

    Take the following example:

    You have a mortgage for $200,000 with Lender A at a 7% interest rate, and you have $20,000 in credit card debt. You find that you can get a mortgage of $220,000 from Lender B with a 5% interest rate. You use the $200,000 to pay off Lender A, and the $20,000 to pay off your credit cards, and then you repay Lender B over the long-term with a lower interest rate.

    But if interest rates keep rising, you might not be able to secure as low of an interest rate for your refinancing, which could make the loan harder to pay off.

    If mortgage refinancing is on your mind, but you’re not sure if it’s the right move, we can help. DebtCare Canada can assess your situation to determine whether refinancing your first mortgage is a good idea, or if another debt consolidation method would work better.

    Don’t wait until July 11. Get in contact today to go over your options.

    Call us for a free consultation: 1-888-890-0888.

  • Bank of Canada Mortgage Rates Stay at 1.25% After May 2018 Announcement

    The Bank of Canada mortgage rate is remaining at 1.25% for now.

    In an announcement on May 30, 2018 the Bank of Canada (BOC) said that the overnight interest will stay at 1.25%, at least until the next statement scheduled for July 11, 2018.

    The BOC said it is proceeding with caution, but that it still believes higher interest rates will be needed for the future.

    Since July of 2017, the BOC has raised Canadian interest rates (and correspondingly Canadian mortgage rates) from a record low of 0.5% to the current 1.25%. There have been three increases during that time, with the most recent hike happening in January of 2018.

    Despite the May 2018 hold, economists are predicting that the BOC will raise interest rates at least once more in 2018 — and it could be during the July 11 announcement. Currently, the predicted chances of a July interest rate increase are sitting at about 55%.

    What does this mean for your mortgage, or other debts?

    As you’re likely aware, the BOC interest rate affects all forms of unsecured debt. This can include the amount you owe on your credit cards, unsecured lines of credit, variable-rate mortgages, or any other forms of debt with a changing interest rate.

    Even if you have a debt with a fixed rate, such as fixed-rate mortgage or a fixed-rate loan, if you have a renewal coming up, the increasing interest rates might mean that your lender will renew your debt at a higher rate.

    Although Canadian interest rates are staying steady for now, it’s still important that you look at the overall picture. Consider the following:

    1. Don’t Rush into Too-Good-To-Be-True Deals

    Recently, some Big 6 banks have been offering heavy discounts on variable-rate mortgages. To recap, a variable-rate mortgage is one that changes with interest rates. If interest rates go down, your mortgage goes down. But if interest rates go up, your mortgage goes up.

    If you’re shopping for a mortgage, you’re up for a mortgage renewal, or you’re considering mortgage refinancing, these deals can look very tempting. But you need to consider the rest of the implications. If interest rates increase, as they are predicted to do, could you afford the hike? How much other debt do you carry and how would that be affected by an increase? You need to assess all the variables.

    A variable-rate mortgage could still be the best choice for you, but make sure you are comparing it to a fixed-rate mortgage and understanding that there is a greater chance of a variable-rate mortgage becoming unaffordable.

    1. Make a Plan for Your Debt

    The good news about the BOC keeping interest rates at 1.25% is that you have more time to pay down existing unsecured debt before rates increase again. So, if you haven’t yet made a plan to deal with your debt, now is the time to do so.

    Look into your debt consolidation options. It might be in your best interest to consolidate your debts into one fixed, monthly payment. This way your payment rates will remain the same no matter what happens with the interest rates, and your debt won’t rise any higher.

    1. Be Extremely Cautious About Taking on New Debt

    These interest rate increases aren’t going anywhere. In fact, this is just the beginning. The BOC has stated they still feel interest rates need to be higher. One of the reasons they kept interest rates low for so long was because Canadians needed to spend money to fuel the economy. Lower interest rates encouraged more Canadians to take out more loans, put more on credit cards, etc. But now the economy is relying less on consumer spending, which means that it will get more expensive to take out new debt and more expensive to pay back existing debt.

    If there’s a debt you’ve been considering taking out, really ask yourself if you can afford it. Take a look at your whole financial picture. Now might not be the right time to look into a new line of credit or to open up a new credit card. If you are already living paycheque to paycheque and making ends meet through loans, adding more debt is likely to only make the situation worse, especially as interest rates rise.

    Don’t wait until the next BOC interest rate increase to get your debt under control. Whether you’re affected by Canadian mortgage rates, interest rates, or just want to understand your financial picture, DebtCare Canada can help.

    We offer debt relief solutions, financing programs for loans and mortgages, and much more.

    Contact us today for a free consultation: www.debtcare.ca or 1-888-890-0888.

     

  • Will Canadian Interest Rates Keep Rising? We Think So

    Canadian interest rates are on the rise. From July 2017 to April 2018, the Bank of Canada (BOC) interest rate rose from 0.5% to 1.25% — the highest it’s been in nine years.

    The question on everyone’s mind is will Canadian interest rates keep increasing? The short answer is yes, we think so.

    The long answer is in the evidence we’ve found to back it up.

    Fact #1: Canada’s new mortgage rules.

    On January 1, 2018, new mortgage regulations came into effect for Canadians. These introduced a mortgage stress test for uninsured mortgages to make sure that Canadians shopping for a home or renewing a mortgage can afford their house at higher rates. The new mortgage rules make it clear that regulators are assuming interest rates will keep increasing. If the regulators believe that, there is probably merit in that view.

    Fact #2: Canada’s economy is strong.

    The BOC increased interest rates to 1.25% in January of 2018 due to Canada’s strong economy. Canada had solid economic growth in 2017, exports are up, and new jobs are being added. Economic experts are predicting that the economy will keep doing well in 2018. BOC officials say consumer spending will have less of an effect on the economy going forward than it did in the past.

    In a nutshell, this means the government doesn’t need the average Canadian to spend as much anymore. In the past household spending played a bigger role in keeping the economy afloat. Lower interest rates made it easier for Canadians to get credit to fund those purchases. But now that the economy is doing better, household spending isn’t needed as much, and interest rates can go back up.

    BOC officials have also said they are worried about the current level of Canadian household debt and hope that higher interest rates will stop Canadians from relying on credit so much.

    Fact #3: The BOC has said to expect more increases.

    When they made the January 2018 interest rate announcement, BOC officials wrote, “While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target.”

    In summary, BOC officials think that interest rates will keep increasing, but it’s not going to happen all at once.

    What does interest rates increasing mean for you? If you are carrying a large amount of high-interest household debt, the time to take action is now. Rising interest rates could cause financial turmoil.

    You need a plan to deal with the debt and eliminate the highest interest rates before it becomes too much. Debt consolidation options are plentiful and a financial consultant can help find the right solution for you.

    At DebtCare Canada, we deal with debt. We can work through your debt consolidation options and help you prepare for increasing Canadian interest rates.

    Call us today at 1-888-890-0888 for a free consultation or visit www.debtcare.ca.

  • Surviving Rising Interest Rates – Locking Your Rate May Be the Best Time to Refinance

    So far in 2018 Canadian homeowners have experienced several major changes that could affect finances — new mortgage rules and rising interest rates

    First, let’s look at the new mortgage rules. On January 1, 2018, new Canadian mortgage rules came into effect. These regulations require lenders to stress test mortgages based on higher rates to make sure that house hunters and those up for mortgage renewal can afford their house.

    Second, the interest rates. Interest rates have increased three times since July of 2017. They are currently sitting at 1.25%, the highest they have been in nine years. For homeowners carrying a lot of debt, rising interest rates could mean financial turmoil.

    The Bank of Canada has indicated interest rates are going to keep increasing in 2018 and beyond. And the new mortgage rules seem to back that up — if regulators are stress testing mortgages for increased rates, it stands to reason that rates will keep increasing.

    So, what does that mean for homeowners?

    1. If you don’t have a locked-in mortgage rate or are close to your mortgage coming up for renewal, you may want to think about locking in. A fixed mortgage has standard monthly payments that don’t change with rising interest rates, unlike a variable-rate mortgage.
    2. If you are already locked in, anticipate that when you renew, unless there is a major downturn in the economy, your rates could be higher. The sooner you start planning for this, the better off you will be.
    3. Know that your equity position may change. Real estate is driven by supply and demand. New mortgage regulations and higher interest rates mean that buyers will be able to afford less, which may lead to reduced valuations and less equity.
    4. If you are carrying debt, that should be a further motivator to act. If interest rates increase further, and you’re carrying a lot of high-interest debt, that’s going to mean higher payments for you. Can you afford that?

    One common way of dealing with excess debt is mortgage refinancing. Now could be the ideal time to look at mortgage refinancing before interest rates increase again.

    Ask yourself, what would a new first mortgage look like if you folded in all of your debt?

    In some situations, you may not be able to refinance your first mortgage, or it might not make financial sense to do so. If that’s the case, you may want to consider a second mortgage. If debt is excessive, a second mortgage could mean far less interest than you are likely paying on credit cards.

    If you’re thinking about mortgage refinancing or a second mortgage as a possible debt solution, it’s best to speak with an experienced debt consultant first — one who will assess you and present you with all of the financial options available to you, the pros and cons, and guide you to the best financial plan.

    For more information about mortgage refinancing or second mortgages, please contact DebtCare Canada today by calling 1-800-890-0888.

  • BOC Interest Rate Jumps to 1.25%

    Higher interest rates for Canadians are continuing in 2018. On January 17, 2018, the Bank of Canada (BOC) announced an interest rate increase to 1.25 per cent. The BOC interest rate affects all forms of debt, including student loans, home equity lines of credit, credit cards, and more.

    The strong economy, job growth, and business investments were all cited as reasons for the January increase.

    The first BOC interest rate increase came in July of 2017, taking the rate from 0.5 per cent to 0.75 per cent. The second increase happened in September of 2017, going up to 1 per cent. The January announcement is the third increase; however, more are expected to come in 2018.

    “While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target,” the BOC said in a press release.

    The BOC isn’t the only one increasing rates. After the BOC announcement, Canada’s major lenders are raising their prime lending rates, which will affect variable-rate mortgages, home equity lines of credit, and personal loans.

    The BOC acknowledged Canada’s record-high household debt, but said that it predicts consumer spending will go down with increased interest rates and new mortgage rules.

    The next BOC interest rate increase is scheduled for March 7.

    Does the BOC interest rate increase have you worried about your debt levels? Higher interest rates can make outstanding debt that much more difficult to pay off. But there is debt relief available.

    One of the best ways to find debt relief is to work with a qualified financial professional to know your options and make the wisest choice. DebtCare has debt relief programs that can help you cope with this BOC interest rate increase and any future ones, too.

    Call DebtCare today at 1 (888) 890-0888.