The Rate Went Up. Your Hope Doesn’t Have To Go Down.

On Wednesday, the Bank of Canada increased its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75%. It’s the first increase in more than three years, and it was expected by markets and economists. bankofcanadaBloomberg

Why it happened

The Bank said inflation is looking higher and more persistent than it projected in July, and it raised the rate to reduce the risk that continuing high energy prices spread to the prices of other goods and services. In plain words, it’s trying to keep everyday costs from climbing further. bankofcanada

What it means for your home and your wallet

Higher borrowing costs immediately affect variable-rate mortgages, HELOCs, and auto loans. If you have a fixed-rate mortgage, take a breath. Fixed mortgage rates are not directly affected by Bank of Canada rate decisions. Your payment stays the same until your term ends. azatmoneysense

We also want to be honest with you. The Bank said it will decide whether more increases are needed one decision at a time. The next rate decision is scheduled for December. Bloombergcbc

Now, the part the headlines leave out

There is also good news in this announcement. The Bank noted that growth has picked up this year and is expected to recover further. A rate increase isn’t a sign that everything is falling apart. It’s a sign the economy is moving, and the Bank is working to keep it steady. bankofcanada

Hard seasons are real, but they aren’t permanent. We’ve seen markets rise and fall over the years. What we’ve learned is that the families who come through well aren’t the ones who panic. They’re the ones who stay calm, get clear, and take one wise step at a time.

Three things you can do this week

1. Know where you stand. Find your mortgage statement. Is your rate fixed or variable? When does your term renew?
2. Don’t sign a renewal without comparing. If your renewal is coming up in the next few months, talk to a mortgage broker before you sign.
3. Count what’s still good. Write down three things you’re grateful for tonight. Gratitude doesn’t change the interest rate, but it changes the person facing it.