B.C. Premier David Eby said the Bank of Canada interest rate rise Wednesday is “devastating news” for families that have debt.
“They borrowed money for various reasons to get through,” he said at the annual premier’s meeting in Winnipeg. “A lot of businesses in British Columbia borrowed money to get through the pandemic. They’re struggling under the weight of that debt.”
The Bank of Canada has raised its benchmark interest rate by another 25 basis points, bringing it to levels not seen since 2001 amid fears the decline in inflation “could stall.”
Economists say the latest move is a warning to Canadians not to expect rate cuts anytime soon, and that future rate hikes are not off the table. The central bank’s key interest rate now stands at 5.0 per cent following back-to-back increases.
Eby said he worries about the full impact of the high key interest rate.
“You really do have to wonder when the Bank of Canada is going to take a pause and see what the impact of this is going to be,” he added. “We haven’t seen the full impact yet. People have not renewed their mortgages yet. And the businesses that are struggling under debt have not started going under yet. But they will those jobs will be lost. And it won’t just be in British Columbia. It’ll be across the country.”
Angela Calla, author of The Mortgage Code, told Global News that this interest rate means Canadians who do have a mortgage coming up for renewal in the next year should not wait to get their rate hold.
“Rate holds can be held for 120 days,” she said. “There is no cost to get a rate hold and then allow the timing of the market to determine what the best option is for you. We certainly don’t expect decreases in the next year, so having that in mind can give you the power to shop early with any mortgage renewal or purchase.”
Calla added that more increases are expected until the Bank of Canada gets inflation in line.
— With files from Craig Lord