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Rising interest rates a warning to consumers that low rates aren't permanent

The Canadian Press   Sep-06-2017

A woman walks past the Bank of Canada Wednesday September 6, 2017 in Ottawa. The Bank of Canada announced it would raise the benchmark interest rate by a quarter of a point to one per cent.

THE CANADIAN PRESS/Adrian Wyld


CALGARY — Financial experts say the second uptick in Bank of Canada interest rates is a warning to consumers that more could on the way, and now is the time for Canadians take a serious look at their debt.

Patricia White, executive director at Credit Counselling Canada, says years of increased borrowing at low interest rates means many people aren't prepared for the higher borrowing costs that could be coming.

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She says the growing use of home equity loans and lines of credit means more Canadians are exposed to immediate changes in borrowing rates, while those thinking about buying a home need to take a prudent look at what they can afford to pay.

The warning comes as the central bank hiked its rate Wednesday by one-quarter point to 1.0 per cent, its second 25-basis-point increase since July.

Eric Kam, an associate professor of economics at Ryerson University, says the rise in rates would likely not stop anyone from buying a home, but they may consider a smaller one.

He says the government is using the increase in interest rates to temper the housing market, and to remind consumers that the historically low rates they've enjoyed won't last forever.


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