Credit Counselling Society of B.C. urges homeowners to switch to fixed-rate mortgages
Advice comes after Bank of Canada’s second interest rate hike
The Bank of Canada raised its interest rate to one per cent on Wednesday, the second time the bank raised rates since July, and comes at a time when many British Columbians are struggling to pay off debt.
Scott Hannah, the president and CEO of the Credit Counselling Society of B.C., said the interest rate hike will be a struggle for many people in B.C. As it is, 59 per cent of workers in B.C. already live paycheque to paycheque, more than anywhere else in the country.
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"I think it's enough to cause some worry and some concern, particularly for those individuals who may be new homeowners within the last year and have taken a very large mortgage," Hannah told CBC's host of On The Coast Stephen Quinn.
Financial ramifications
A report by TransUnion last year estimated that if interest rates were to go up by a percentage point, 700,000 Canadian households would face serious financial ramifications.
"That isn't lost on me," Hannah said about the TransUnion findings. "We're at a point where a lot of consumers really need to take a hard look at their situation and make some adjustments today when they can so they are not impacted later on."
Fixed rate mortgage
Homeowners should consider switching to a fixed rate mortgage, Hannah said, as a preventative measure against future interest hikes.
"It's a lot easier to sleep knowing what your rate is rather than what it isn't," he said. "Now is probably a really good time to think about locking into a fixed rate for the long term instead of riding out that variable rate to see if it stays low."
Hannah said he hopes this most recent spike this will spur people to take a hard look at their finances to get ahead with paying off debt.
"Our government has been warning Canadians for the last few years, all levels of government, it's time to curb our appetite on debt and unfortunately we haven't been listening," he said.
With files from On The Coast.