Mortgages impacted as Bank of Canada hike interest rates

The Bank of Canada announced Wednesday that interest rates are rising and that will impact the money in Canadian’s pockets.

The benchmark interest rate is now pegged at 0.75 per cent.

Bank of Canada governor Stephen Poloz said the economy can “very well” handle the hike.

The increase will have the biggest impact on the mortgages.

“On a $100,000 mortgage it adds $250 per year on your mortgage,” explained Elton Ash, a regional vice-president for REMAX.

Realtors like Ash are expecting a surge in home sales as people look to get into the mortgage before the costs increases further.

“Typically many buyers are pre-approved for mortgages for a set period of time so they decided to get into the market now and lock-in,” Ash said.

It is a sentiment echoed by financial advisors as they look at the impact from the interest rate hike.

“It might be time to consider locking into a fixed rate and ensuring that your rate is guaranteed for the next three or five years,” Gordon Pape with the Internet Wealth Builder newsletter advised.

The interest rate hike is unlikely to be the only one we will see in 2017.

“Looking further down the road, it’s much foggier but the predictions that I am hearing at this point are that we will get to one and a half per cent by 2018,” Matt Padanyi with Business News Network said.

This is the first Bank of Canada rate increase in seven years.