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Tag: BOC interest rate

  • 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.

  • 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.