Bank of Canada increasing Interest rates

[tonytiger55]

Soooooooooooooooooo... the Bank of Canada is increasing interest rates.. though not by much.

But its interesting to see the see banks give tales of doom, anarchy on the streets and people running out of food...

Omg I think people are going to have to eat thier little chihuahua's..

http://www.cbc.ca/news/business/bank...licy-1.4200814

What are peoples thoughts..?

[flipstah]

Just glad I went fixed-rate on a mortgage. My LOC is affected though. MEH.

[TimLacroix]

This increase is not anything to panic about. The change is approx. $13 per month increase for every $100,000 borrowed.

Hopefully, many who have variable mortgages have been taking advantage of the low rates with lump sum prepayments or by setting their mortgage payments as if they took fixed. And when there is an increase like today, adjusting the payments accordingly to maintain the advantage (spread).

Be cautious if you are thinking of locking in. Fixed rates have already risen so if you are thinking of locking in, maybe look at just increasing your payments. What would be the fixed rate if you locked in and change your payment to match it. As an example, most lenders will offer you a 5-year fixed rate at 2.69% - 2.84%. Again, locking in might be a good strategy for some but making payment changes is just as effective and likely save you some $$$.

Feel free to reach out if anyone has questions.

[tonytiger55]

No dog chow for me (well...not yet anyways). Im on variable, so rates went down. So now they are coming back up. So no real difference.

Only down side is my pay rise has been below the rate of inflation for the past four years in three of the jobs I have had. I think that is the bigger issue.

[Pacman]

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This increase is not anything to panic about. The change is approx. $13 per month increase for every $100,000 borrowed.

.

Interesting and this puts it into perspective. Why are the media acting as if this rate increase is going to start the beginning of the housing crash in Canada? Are they concerned this .25 increase is going to be the first of many to come over a short period of time?

[roopi]

When the Bank of Canada last decreased rates by .25 didn't the banks not follow and at most reduced them by .15? I'm assuming the same won't happen on the increase though?

[TimLacroix]

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When the Bank of Canada last decreased rates by .25 didn't the banks not follow and at most reduced them by .15? I'm assuming the same won't happen on the increase though?

You are correct that they did not lower all the way the last 2 drops... but do you think the Banks will leave money on the table? We will soon see if they have a heart...

[phreezee]

I'm surprised it took this long with Liberal debt spending. Higher taxes and inflation for the foreseeable future under the Liberals.

[Tik-Tok]

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Why are the media acting as if this rate increase is going to start the beginning of the housing crash in Canada?

Because sensationalism sells. I love the polls they do, asking how people "feel" they will be affected by a 1% increase. Why not ask them what would happen with a 5% increase too? And of course the answers are "this will affect me negatively"... derrr.

[mzdspd]

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Why are the media acting as if this rate increase is going to start the beginning of the housing crash in Canada?

It is not just the media though. I have noticed lots of paid ads on FB and in newspapers put out by the banks. They just want everyone to panic and lock in because the banks had already raised their lock in rates because of this. More $$$ for the banks.

[Buster]

Locking in your rate is you making a trade against the bank's traders. These peoples' sole mission is to make money off of retail customers. The probability of you profiting from this trade is very small.

Traders that I know that work where the public is the counterparty get bored generating huge profits.

Just float your rate.

[Masked Bandit]

Meh, things are going to have to come up a lot more than this before it starts impacting day to day life.

[Buster]

The impact on monthly cash flow probably won't be a concern for many here. The bigger issue is the cooling it might have on asset prices... Both directly and psychologically.

[Twin_Cam_Turbo]

No affect on my personal finances however, I have a mortgage renewal in just over a year that I'll have to watch the rates and decide on. Definitely not looking good for the business side of exporting vehicles though however it might rebound and settle.

[mazdavirgin]

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Interesting and this puts it into perspective. Why are the media acting as if this rate increase is going to start the beginning of the housing crash in Canada? Are they concerned this .25 increase is going to be the first of many to come over a short period of time?

It's the beginning of the upward rate tightening cycle. You can expect the BoC to be increasing rates by .25 like clockwork for the next few years until we are back to roughly historical average rates. This will definitely apply significant downward pressure to the housing market. The housing market is very very slow to react but it will react and you can expect people to lose confidence and accelerate the correction in the pricing.

[tonytiger55]

They (Banks) will make money on the rate increase for sure.
But it impacts their sales/margin on the LOC in sales in that part of the business. Ultra low rates has enabled them to sell LOC and customers have leveraged themselves in a way that they are living beyond their means. Yeah banks will complain, but its a problem created by the banks as they exploited the financially vulnerable. Rates go up, slightly, customers have to cut back on puppy chow, less money to pay the banks. Banks complain I guess.

[Dave P]

Dollar up to $0.80

USA USA USA

[HiTempguy1]

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Dollar up to $0.80

USA USA USA

YASS.

As an importer, this makes my life a lot easier. I dream of the day we are close to par again.

[blownz]

I wonder how much the "high interest" savings accounts will move...

[Xtrema]

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Dollar up to $0.80

USA USA USA

Going in the fall. This does help.

Well I think another quarter % is in short order and get back to 2% before this decade is out make sense. We need some room to survive the next major financial crisis.