Once again, the Bank of Canada siting strong economic results, has boosted its prime lending rates by another 25 basis points.
The central banks interest rate now sits at 1.25 percent, it’s the third hike since last summer after sitting idol for eight years.
The change is expected to prompt Canada’s large banks to raise their prime lending rates, a move that will drive up the cost of variable-rate mortgages and other variable-interest rate loans.
Brian Golly an investment advisor with Smart Investing Solutions says buys now need to take extra caution and monitor their cash flow carefully to make sure they can afford to borrow money.
Golly says the recent increases are probably not enough to turn away buyers from variable loans.
“If the banks make the variable loan attractive enough, then obviously some people would take advantage of it,” Golly said. “But based on a cash-flow basis and what it would take to get into it, I’m not there to think a variable loan would disappear completely.”
Canada’s economic growth is expected to average around two and a half per cent in the short term, before slowing to a more sustainable pace.