Canadians Reveal How the Bank of Canada’s Latest Rate Hike Will Affect Them

Ever since the Bank of Canada announced the biggest interest rate hike in decades with the aim of tempering rising inflation, Canadians have been assessing the impact on their purchasing decisions and financial futures.

This week, CTVNews.ca asked Canadians what impact the unexpectedly large rate hike will have on their lives.

While some are left scrapping plans for home improvements and lowering grocery budgets, others, hoping to get into the real estate market, see the increase as a “positive” opportunity amid falling home prices.

PROBLEMS FOR OWNERS:

Catherine Sarginson, of Victoria, BC, wrote in an email to CTVNews.ca about the problems she now faces as a homeowner. “The cost of gas and groceries is already killing me. The interest rates on my home equity line of credit increased my payments by more than $80 before this latest increase. I have to renew my mortgage next year and I don’t know what I’m going to do. I already cut the cable, I sold my television, I canceled the newspapers and magazines. I haven’t been to the movies in three years. I haven’t bought new clothes in over four years. There’s just no way I can cut any more.”

Kevan Spice, another Alberta homeowner, emailed to say the interest rate hike is bringing him to a financial “breaking point.”

“I have a job in the homebuilding industry and my work almost came to a standstill due to people’s fears of unviable interest on their mortgage and inability to absorb rising costs,” he wrote. “The cost of my daily living has risen beyond the point that I can afford with my current financial situation. Mainly, all my money is allocated to necessities and not to additional loans outside of my mortgage.”

Another Canadian owner, Tjreddy Pierrefonds, who did not disclose a location, wrote that costs for vacations, home improvements and entertainment expenses must now be reduced to offset the increase in pay.

Many Canadians, however, also see an opportunity in the central bank’s big rate hike.

‘POSITIVE’ IMPACTS:

James Stockton, of Waterloo, Ontario, wrote that drastic interest rate hikes only have a “positive impact” on him.

“I don’t own a home and my business doesn’t own our space, and lately there has been no hope of that changing,” he wrote to CTVNews.ca. “The only place my money has had any chance of growth for a number of years has been in the markets, which have now crashed and wiped out a significant amount of my wealth. The pandemic has substantially brought my business to a standstill and we have not come close to recovering yet (although we are slowly moving in the right direction). The bottom line is that inflation is hurting my business and substantially eroding my real income.”

Garry Miles of Riverview NB wrote that he expects a major home price correction to “severely hurt some, but allow others to take advantage of falling home prices.”

“Personally, I am retired with no debt,” he wrote. “So the increase in fees payable by GICs is very welcome as they have minimal risk and I need to convert my small RRSP into a RIF next year.”

Ross Reynolds, who did not reveal a location, also emailed CTVNews.ca, writing that the increase will have “no effect on him.”

“I have no debt whatsoever,” he wrote.

He added that “those who have a mortgage and those who paid thousands and thousands above the sale price are in trouble for sure.”


Editor’s Note: Answers have been edited for grammar and clarity.

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