The bank of Canada has raised its key interest rate to 1 per cent, the highest amount in 20 years, and that could mean significant financial impacts for many Canadians.
Nancy Sneddon, President and Licensed Insolvency Trustee at BDO Canada says there is record inflation, noting that the Bank of Canada has said that inflation could get close to six per cent, which is “unprecedented.”
As well, she says the key interest rate could reach up to two per cent before all is said and done.
She says the rate hike will will mostly affect those with variable rate debt, such as home equity lines of credit, regular lines of credit, and variable rate mortgages.
She says many of those people will see an increase in what they’re paying.
She cites information from Trans Union, saying that the average HELOC right now is $142,000. People with an interest rate of 2.7 per cent would be paying about $650 on that line of credit, this rate hike will see that number jump to $724, and even higher with further increases.
Sneddon says that is a significant increase because many Canadians are “at the tipping point” of whether or not they can afford to live.
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2022-04-15 11:53:00Z
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