Why You Should Pay Attention To The Bank of Canada’s Interest Rate Announcement – .

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Five things to watch in the Canadian business world in the coming week – .


HUNTSVILLE, ONT. – The Bank of Canada has an interest rate announcement on Wednesday and I think we should all listen carefully and here is why.

The pandemic has toppled many Canadians, dealing a huge blow to their financial lives. The past 15 months have been difficult for some, devastating for others and for some a godsend.

There are Canadians who prosper and others barely survive, financially speaking.

So why should you care about the Bank of Canada announcement? As the economy continues to improve, rates will rise and for those living with debt, mortgages, or even paycheck to paycheck, payments will become much more expensive.

The good news is that we are starting to see a light at the end of the tunnel as provinces begin to open up and employment increases. In fact, the number of Canadians sufficiently encouraged to go out and look for work was reflected in the recent Labor Force Survey and increased enough to translate into a drop in the unemployment rate from 8.2% to 7.8. %.

Our economic growth is largely on track at around 6% and while inflation has been a concern and some prices continue to be higher, we will likely hear that it is temporary.

In other words, there are strong reasons to be cautiously optimistic about the continued growth of our economy, job growth, and rising immunization levels.

Eventually, rate hikes will come. By eventual, I mean, the estimate remains in the second half of 2022. So you have time, but time is running out.

Higher rates will make your loans and mortgages more expensive and for areas with extremely expensive real estate like Toronto and Vancouver, that could mean hundreds of dollars more on your mortgage payment. This will also result in higher payments for lines of credit and even student loans.

Higher rates will be good news for savers who have earned next to nothing on savings, guaranteed investments, and fixed income investments like bonds.

However, as job opportunities increase for the unemployed in hard-hit industries such as hospitality or retail, now is the perfect time to get your finances in order. For others who have been a part of the real estate craze, you might also experience a hard-to-absorb shock if you’re sitting down with an adjustable rate mortgage.

But before you panic, Ratehub.ca says the lowest five-year adjustable rate mortgage in Canadian history now stands at 0.98%. This could lead to significant savings and widened the gap between fixed and variable rates – 1.74% or 0.76 more than the best variable rate.

So if you are in an adjustable rate mortgage, the prudent strategy would be to put your savings in an emergency fund and monitor the bond market closely for signs of a rate hike. Locking in your mortgage could be peace of mind for homeless Canadians.

The good news is, you probably still have some time. This means the Bank of Canada would have to hike rates three times to almost match the best fixed rate right now.

Next Wednesday I will be listening carefully to what Bank of Canada Governor Tiff Macklem has to say about the state of the economy and I encourage you to take a close look at your financial situation so that it aligns with a higher rate environment in the future.

As signs of improvement appear, we should be encouraged, but now is not the time to be complacent.

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