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Tag: Bank of Canada interest rate

  • Bank of Canada Interest Rate Stays at 1.75% for March 2019

    The Bank of Canada interest rate is staying at 1.75% for March 2019.

    On March 6, 2019, the Bank of Canada (BOC) announced they are maintaining the overnight interest rate for the time being.

    Their reasons were:

    • The slowdown to the global economy has been worse than the BOC predicted – including trade tensions and uncertainty.
    • In Canada, consumer spending is down despite employment growth. Essentially, people are spending less but earning more.
    • The housing market is also down.
    • Business exports and investments have fallen short of expectations.

    The next BOC announcement is scheduled for April 24. Between now and then, the BOC will be closely watching “developments in household spending, oil markets, and global trade policy.”

    What This Means for You

    At first glance this is good news – no interest rate increase means more time to deal with outstanding high-interest debt.

    But there is some information that could be concerning.

    1. Housing Affordability

    According to the BOC, Canadians are earning more but spending less. At the same time, the housing market is softening – so many homeowners may be locked out of the market or have their home equity drop.

    Housing affordability in Toronto, Vancouver, and other major cities has been making headlines recently. Having a bigger paycheque may not mean much if your expenses are still rising.

    What to do if you’re worried about your property value or accessing mortgage financing:

    Talk to a financial counsellor about your home equity position and what your options are. For instance, at DebtCare we offer first mortgages, second mortgages, home equity lines of credit, and more.

    2. Unstable Employment

    There have also been headlines about precarious employment – meaning more people have jobs, but those jobs are not necessarily stable income. They may be temporary contracts or have fluctuating hours. In these cases, it can be hard to plan for, and stick to, a budget.

    If you’re worried about stable income:

    Talk to a financial consultant about creating a flexible budget that works for you and about financing for slower periods.

    3. Household Debt

    The third factor that might be at play is many Canadians are using any extra income to pay off debt. Canadian household debt reached a new high in 2018 — over $2.16 Trillion. When you have high levels of debt, it can be hard to pay it all down. This often causes a vicious cycle of paying for the same bills over and over, especially if you are only making the minimum payment each month.

    If you’re worried about household debt:

    Talk to a financial consultant about your debt management options. Debt consolidation, home equity, or insolvency filing options – like filing for a consumer proposal or for bankruptcy – can help deal with problem debt in a sustainable way.

    Get your finances on track before the Bank of Canada announcement on April 24. DebtCare Canada can help.

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

  • No Interest Rate Increase for January 2019: Time to Restructure Debt?

    There will be no interest rate increase this month, or in February 2019.

    The Bank of Canada (BOC) announced on January 9, 2019 that the overnight interest rate would remain at 1.75% for the time being – at least until the next announcement, scheduled for March 6, 2019.

    Reasons for the hold include the global trade economy (especially U.S.-China trade conflict); lower oil prices; and weaker-than-expected housing investment and consumer spending. Areas affected by oil production, like Alberta, may also struggle with consumer spending in the near future.

    There’s good news, too. The Canadian economy is doing well, the BOC said, with unemployment at a near 40-year low. Inflation is on target as well.

    And, of course, the hold is good news if you are carrying variable-rate debt.

    With nearly two months to go until the next BOC announcement, now could be a good time to restructure debt. But what does that mean exactly?

    If you are carrying $5,000 of debt on one credit card, $2,000 on another, and have a $10,000 line of credit, you might owe interest on all of those amounts. If interest rates increase again, because they have variable (non-fixed) interest rates, you’ll owe even more.

    But if you take steps to restructure debt – move it around or combine it – you won’t owe as much interest. Plus, you may even be able to restructure in a way that moves your debt to a fixed interest rate, meaning it won’t change with the BOC overnight rate.

    Options for debt restructuring include:

    • Accessing home equity.
    • Obtaining a debt consolidation loan.
    • Entering into a debt relief program.
    • Filing for a consumer proposal.
    • Filing for bankruptcy.

    Whichever route you choose, it’s best to act now, before interest rates rise again. The BOC has said more increases will likely be warranted in 2019, though they didn’t specify when. The best course of action is to get prepared now so when it does happen, you won’t have to worry.

    DebtCare Canada can help. Contact us today for a free consultation to go over your debt restructuring options, find financial relief, and more.

    Call 1-888-890-0888 or visit www.debtcare.ca. 

  • Bank of Canada Staying at 1.75% for December 2018 – But Don’t Delay Dealing with Interest Rate Debt

    Good news for 2018: we won’t be seeing any more Bank of Canada interest rate increases this year.

    On December 5, 2018, the Bank of Canada (BOC) announced that the overnight interest rate would stay at 1.75% for the month of December.

    The next interest rate announcement is scheduled for January 9, 2019.

    What does this mean for Canadian consumers? It’s a positive if:

    • You’re carrying a lot of debt — this means your payments won’t be increasing yet.
    • You’ve been charging holiday purchases to your credit cards. While you’ll still have to pay for those purchases, and associated credit card interest rates if the balances aren’t paid in full, you won’t have an additional BOC rate hike.
    • You have a variable-rate mortgage. This means that your rate won’t be increasing this month.
    • You’re rebuilding credit. If you’re working on credit repair, it’s important to pay your bills in full and on time. If you have bills that are affected by changing interest rates (i.e. not a fixed cost), it will make it easier on your budget.

    What this doesn’t mean:

    • You should spend more this holiday season. Remember that whatever you charge will need to be paid off in full and on time if you want to avoid interest. If you’re racking up holiday purchases and are tempted to spend more because of the interest rate hold, proceed with caution.
    • Interest rates are done increasing. It’s possible the BOC will raise rates during the January 9 announcement. If so, this is a relatively small window. Make a plan now while there is a break in increases.
    • You can ignore dealing with debt. If it’s hard to make ends meet now, it will be even more difficult if rates rise again. Honestly assess your finances and ask if you could handle an increased rate. If not, it’s time to consider debt management options, like accessing home equity, applying for a debt consolidation loan, or filing for a consumer proposal or for bankruptcy.

    DebtCare Canada can help future-proof your budget against interest rate increases.

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

  • 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.

  • 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.