For the first time in seven years the Bank of Canada has raised the interest rate which means mortgage payments for some Winnipeg homeowners will be going up.
Homeowners with variable rate mortgages will see their payments increase immediately while fixed rate mortgage holders won’t see the increase until renewal.
READ MORE: How the Bank of Canada’s interest rate hike affects your wallet
While the increases aren’t too large, a $300,000 mortgage would go up by around $40, they could be problematic for some.
“What we’re worried about is a lot of people were buying the maximum amount of house they could afford before, this may push them towards a point where they can’t afford it,” said Rob Warren, Manitoba economist.
READ MORE: Bank of Canada expected to hike interest rate for 1st time in almost 7 years
Though small, the rate hike could also prevent new homebuyers from getting into the market by pushing the risk level for monthly payments too high for lenders.
“Sometimes people are skating by on thin ice and they’re kind of saving up every penny and everything they have for their first home and this can potentially tip the scales,” said Michael Froese, broker and managing partner at Royal LePage Prime Real Estate.
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However Warren cautions it’s not just mortgage holders that will be affected.
“Think about all of your expenditures, don’t just focus on one because this is going to impact everything you do,” he said.
Any kind of personal debt like a line of credit or student loan will also see higher monthly payments.
Even groceries and retail items could get more expensive as companies pass on their higher borrowing costs to consumers.
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