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Are Interest Rates Going Up in Canada?

At the beginning of March 2022, the Bank of Canada announced its first interest rate increase since the start of the COVID-19 pandemic. This means that interest rates in Canada as a whole are likely starting to shift up as the economy begins to recover and the country learns to deal with the pandemic. The increased rate has a particularly noticeable impact on the real estate market, as big banks and traditional lenders are likely to increase their mortgage rates to match.

For some homeowners in Canada, it might be a good idea to lock in your mortgage at current rates. However, this largely depends on your financial situation and other factors, such as the balance left on your mortgage, your income for the foreseeable future, and how quickly interest rates are going up.

Interest rates going up in Canada represent a return to normal, not an actual increase over what we’ve been used to over the past decade or so. Currently, due to inflation, we’re experiencing higher costs in other areas, but those are expected to fall back in line over time as well. In the long-run, for most Canadians, rising interest rates won’t represent a change in the affordability of their mortgages.

Are Interest Rates Going Up in Canada

When are interest rates going up in Canada?

We’ve already taken the first step towards interest rates going up on March 3rd with the Bank of Canada’s announcement. Additionally, we can expect that over a period of time, we’ll continue to see rates rise, since the main reason the government has cited for raising the rate is to offset inflation. Without a doubt, have felt the financial effects of rising prices for everyday goods and essentials. A return to normal, higher interest rates will need to be slow to be manageable.

It’s quite possible that we might see interest rates going up in Canada again later this year, and homeowners with mortgages should take this into consideration when planning their next move.

Why are interest rates going up in Canada now?

We’re at a point where we’re starting to learn how to live with the pandemic, and more than ever, people are pushing to return to normal. This essentially means that the Canadian economy is kicking back into gear. To make sure it happens in a stable and healthy fashion, the Bank of Canada has increased interest rates to make sure the economy starts to cool down.

It’s important to remember that the mortgage market has been enjoying interest rates that are much lower than normal. Interest rates going up in Canada is part of the return to normal.

What do rising interest rates mean for my mortgage?

The Bank of Canada rate increase means that financial institutions and banks will follow suit. On top of this, many traditional mortgage lenders may potentially add their own conditions that lead to increased mortgage rates. Canadians with variable-rate mortgages through traditional lending avenues will notice these effects almost immediately over the next few months.

For those with fixed-rate mortgages, it’s unlikely that much will change until their mortgage term is up for renewal. At that time, however, they may find that their lender is proposing a new, higher interest rate due to economic changes and other factors related to their finances. Depending on how far down the line renewal is, homeowners might see a significant increase to their mortgage rates.

Should I lock in my mortgage rate in 2022?

The increasing mortgage rates have the biggest impact on Canadians with tight financial constraints. Rising mortgage rates can make all the difference between a sustainable lifestyle and needing to take out a loan, especially with variable mortgages. Thankfully, you have a couple of options in this situation.

First, you might choose to lock in your mortgage, which comes with a noticeable increase to mortgage rates, but minimizes the amount of extra interest you’ll have to pay on your mortgage statements. This is a good option if you believe that mortgage rates are going to rise very quickly over the remainder of your mortgage term. On the other hand, if you’re up for a lengthy renewal and the rates go back down, you might be stuck with a higher interest rate than you would have had otherwise.

Alternatively, if interest rates going up in Canada means that you’ll have difficulty making ends meet, a home equity loan can be exactly what you need. Specifically, a home equity loan or line of credit product through Alpine Credits doesn’t look at your income, age, and credit history, which means that you’re able to get the funding you need in a pinch.

Why interest rates going up in Canada is a perfect time to get a home equity loan?

With interest rates going up across Canada and even within the mortgage market, now is the perfect time to use a home equity loan to finance your down payment for an investment property. Rising interest rates likely means even more competition in the real estate market as homeowners scramble to secure the home of their dreams while rates are still low. If you’re lacking the funds you need to put money down towards securing your second or third home, Alpine Credits can help!

By leveraging the home equity you have in your current home, we can get you approved in less than 24 hours and get funds to your account within a few days. This can make all the difference when placing offers for homes on the market, where time is of the essence. With over 50 years of experience, we’re sure to find a plan that works for you.

Call us at 1-800-587-2161 or apply now to get a free quote and see how we can help you secure a great option amidst rising interest rates in Canada.