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Latest Inflation news you must read!

Canada’s inflation rate rises to 3% in July, highest levels since 2011,

 according to Statistics Canada.  That is 1% higher than the 2% inflation target set by the Bank of Canada.

The Central Bank will likely hike rates on Sept 5th.  Increasing rates is a proven tool used by the federal government for fighting inflation.

What is Inflation?

  • Inflation is basically a rise in prices.
  • A more exact definition of inflation is a situation of a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise.

At lower interest rates, people tend to borrow larger sums of money.  The result…consumers have more money to spend, causing the economy to grow and inflation to increase.

At higher interest rates, borrowing money is less attractive.  The result…with less disposable income and less spending, comes, the slow down in the economy and inflation decreases.

How will The Bank of Canada rate hike affect my finances?

As the Bank of Canada tightens its monetary policy by increasing interest rates, this will directly impact the major Banks and Lenders, and have a trickle-down effect on the prices consumers pay to borrow money.

Borrowers with variable-rate mortgages will feel the increase in the overnight rate immediately when banks increased their lending rates.  We could end up paying a little more each month. While the increases may be small, it’s still money that’s not in our pocket.

Borrowers with a fixed-rate mortgage won’t have to deal with the impact until it’s time to renew at the end of their fixed term.

With 5 year fixed rates still at historical lows and chances of a rate hike in the near future, its never been a better time to contact Team Rick Sekhon and get your pre-approval locked in!

CONNECT WITH TEAM RICK SEKHON

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