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.