It was bound to happen one day. The Bank of Canada decided to raise its interest rates on July 12th for the first time in years. Every large bank followed suit the next day. It is now time to revise your budget accordingly.
This first hike does not mean there will be a second one on September 6th of this year, and that the interest rates will keep rising afterward. But, better be safe than sorry, especially given the fact that the total Canadian household debt has reached a record high.
The Bank of Canada is anticipating an increase in the inflation rate. CIBC Bank economists, who issued the “Canadian Inflation: What’s Gone Wrong?” report, also believe the inflation rate will hike soon. Mortgage holders living on a tight budget should prepare accordingly.[……]
Given the restrictions on mortgage financing, which also limits the access to home ownership, many families feel obligated to postpone their plans for buying their property. How about buying a smaller house instead? Times have changed, you know.
In the past, living in a smaller home was too often perceived as some sort of failure. Social success was determined by the size of your home. Big house, lavish lifestyle, large budget. The size of the home sometimes exceeded the family’s needs.