Canada has been battling with enormous challenges which mainly target consumers and individuals. These growing interest rates affected these people, who are also a go-getter and contributors to economic growth through time. As the Bank of Canada shows interest rates hike in July 2023, it is also available to see some loans for bad credit Canada that most people are looking forward to having.
As of July 12, 2023, the Bank of Canada finally announced the 0.25 increase to the previous interest rates, 4.75%, reported last June 7, 2023. Canadian people can’t hide their discouragement by encountering the 5.00% interest rate in the country today. The rise is happening, yet it is not in favour of the public as this will be a considerable challenge for their goals such as homebuying, purchasing a car, and at the same time, applying loans for bad credit Canada.
With growing interest rates, it is now capable for the Bank of Canada to acquire the ability to control the inflation rate. In fact, it is best to let it increase to combat the inflation rate, which mainly produces challenging instances for most individuals to deal with on their own. Even though the banks and the private mortgage lenders are affected, they also become a helpful instrument for most homebuyers in Canada.
The Advantages of Interest Rates Hike
Despite this mid-year increasing interest rates in Canada, there are still some benefits a consumer can look forward to, such as:
• Favourable Interest for Savers
When you send your money to banks and use them for saving purposes, it is evident that it will gather higher interest rates that may extend the power of your savings. That said, you can now earn more from the money you chose to lot for your savings account.
• Increase in Payouts
Another benefit you can look forward to having an increasing interest rate is the favourable increase in regular benefits or entitlements. One can be found in the standard account from Social Security and other government unit funding organizations.
• Stronger Dollar
Higher interest rates negatively impact your life and can also be an excellent factor in changing something. Interest rates hike could lower imported goods’ prices and make a fortunate cheaper cost for Canadians travelling overseas.
The Disadvantages of Interest Rates Hike
If there’s an existing advantage of interest rates hike, disadvantages will not be stopped for you because of increasing interest rates. Here are some cons of rising interest rates for Canadian citizens.
• Costly Loans
As the interest rates came from the Bank of Canada, it is evident that they will influence the banks and the private mortgage lenders to charge more of their borrowers. In short, it is now expensive to borrow money when the interest rates are high. That is why it is best to completely understand how the interest rate will affect the total amount you owe.
• Increasing Payments for Adjustable-Rate Loans
As the interest rates also affect the bank’s policies, it is already given that they will also be adjusting to the policy rate provided by the Bank of Canada. Interest rates for existing adjustable-rate loans such as credit cards and others will also grow. You must be prepared and ready to see how these things will move forward with the income you are holding on to.
• Higher Chance of Recession
If the Fed increases interest rates, it shows lesser demand for goods and services. This will lead to companies hiring less or laying off their workers. With instances like this, a recession can take over the situation. With an interest rate hike, people are less likely to borrow and spend money, driving down demand and prices. In addition, the Fed can reign in excessive growth by raising interest rates which keep money out of the economy.
What Can You Do to Benefit from Rising Interest Rates?
The Bank of Canada has constantly reminded us by giving us the facts about the interest rates in our country. They became transparent enough, from low-interest rates to rising interest rates today.
Due to unforeseen events in the country, we cannot prevent the Fed from increasing interest rates that aim for a better lifestyle, even if challenges are still coinciding.
With continuously increasing interest rates in 2023, it is best to have yourself focus on paying down high-interest debt on your accounts. As the Bank of Canada doesn’t show any recession, it might also be a sign for you to pay down your credit cards and other high-interest debt as soon as possible.
The sooner you pay down these accounts, the sooner you will get protection from a dangerous financial crisis. It is a challenge for you to keep paying down all these high-interest rates debts and accounts. Thus, having another source of income will be helpful for you to keep your finances stable and make ends meet as soon as possible.
Conclusion
Dealing with economic challenges once in a while might be troublesome for you. But it doesn’t change the fact that you have a contribution to it as a Canadian citizen. You might have discouragement right now, but it can also improve your character as you actively acknowledge these matters as positive growth in your life. Along these, Canadian mortgages will also change as they adjust to the interest rate hike imposed.
If you are looking for private mortgage lenders to help you with your homebuying instances, you can connect with Private Mortgage Canada. They have a professional mortgage agent who has provided excellent services for 15 years and more. And with that, there is no doubt that they will help you reach your natural homeownership journey as soon as possible.
Connect with us today and let us live longer without having the interest rate hike bothering us.
