If you haven’t already read or heard about in the news this week, on July 11th, the Bank of Canada raised interest rates to 1.5%. The BOC cited trade tensions among other reasons as the major factors for the change. However, regardless of “why” this rate has increased, it’s now more of a matter of “how” this might affect our clients and their finances.
Many of Canada’s biggest banks, including TD and BMO, have already changed their prime rates in response (which is typical in these situations).
Reading some of the major financial analyst reports, here’s a short breakdown of who might be impacted, and how.
- Customers with variable rate mortgages and lines of credit are now facing higher interest rates (as of July 12th).
- Customers wishing to invest in GICs (guaranteed investment certificates) are advised to “wait and see”, as it is still uncertain as to how much these rates will rise (if at all, depending on your banking institution).
- Canadians with savings accounts should carefully monitor their rates, and depending on how things change, these savings accounts may give a greater return on investments than a five-year GIC (according to some financial analysts, but only time will tell).
An article published by Global News will give a more in-depth overview of how these interest rate changes may impact your savings accounts and GIC’s:
And for more information about “why” these interest rates have changed:
“Some savings accounts could earn you more than a 5-year investment right now”
By Erica Alini, National Online Journalist, Money/Consumer Global News
“Bank of Canada raises benchmark interest rate to 1.5%, noting trade tensions”
By Pete Evans, CBC News
“Bank of Canada raises rates as Poloz’s tale of recovery from Great Recession finally starts coming true”
By Kevin Carmichael, Financial Post
For more information about your individual financial situation, contact Cahill CPA.