How to Get Ahead of Rising Interest Rates

Are you ready for rising interest rates? Recent talk from the Bank of Canada (BoC) suggests they could soon hike rates for the first time in seven years, maybe even as soon as next week. After cutting interest rates twice in 2015, following a plunge in oil prices, the BoC now seems ready to start moving in the opposite direction.

The speculation started in June. While giving a speech in Winnipeg, the No. 2 executive at the bank said “We are seeing the economy pick up”. As interest rates are already rising in the States, BoC Governor Stephen Poloz told CNBC last week that 2015’s rate cuts “have done their job” and “we need to be at least considering that whole situation now.” With the BoC’s next interest rate announcement coming next week, many economists believe an increase is on the way.

What to expect from an interest rate increase

If and when an interest rate hike arrives, it is likely to raise rates by 0.25 percentage points at first. But that’s not to say the increases will stop there. Some experts expect rates to rise another 0.25 per cent in October.

BDO has been writing about interest rates for a while, and offering tips on how to prepare yourself when rates rise. Here are some blogs that could help you get ahead of the next interest rate increase:

Why It’s A Good Time To Pay Off Your Mortgage This article explains the difference between fixed-rate and variable-rate mortgages, and offers four ways to pay off your mortgage faster.

Why You Need To Stress Test Your Mortgage Debt While all insured mortgages have been stress tested since October 2016, it’s still a good idea to stress test your mortgage at higher interest rates to see if you can still afford to make payments.

How Would Your Debt Be Affected By A 1% Interest Rate Increase? A 2016 study found that over 700,000 Canadians would struggle if rates went up by 0.25 per cent, which is likely to happen with the next BoC rate hike. Here’s how to stress test your debt before that happens.

Could You Afford A $500 Increase In Monthly Mortgage Debt? One in three Canadians would struggle if their mortgage debt increased by 10 per cent—which might happen once rates rise. This post mentions three online tools that can help with mortgage debt.

Mortgage debt cannot be reduced by filing for bankruptcy or a consumer proposal, but these and other debt solutions can help make your mortgage payments more manageable by reducing or consolidating your other outstanding debts. Discover all of your debt relief options.