Interest rates are currently at a very low level, and have been falling since the 1980’s. Here’s how an increase could affect you.
- With higher interest rates, Canadians will pay more interest. It is not yet known how Canadians will handle these larger payments but it is likely disposable spending will go down. This will mean less debt overall, as Canadians will be focused on paying it down.
- Mortgage rate will go up. Fixed mortgages will stay constant for their term but variable rates will lead to homeowners paying more for their mortgage. With around 25% of home buyers choosing a variable mortgage rate, they would be in for a rude awakening.
- The housing market could dry up. With mortgages costing more, it would be likely for more Canadians to look into renting as they couldn’t afford the cost of a mortgage.
For more affects of a higher interest rate, click here.