Current Canadian Interest Rates And Where They’re Headed

Interest rates are of special significance if you’re taking out loans for a business, mortgage or car payments. The recent elevations in interest and inflation rates may impact your ability to successfully manage a loan, especially if you’re looking into buying or selling real estate. Therefore, it’s important to understand how Canada sets an interest rate, the status of the current interest rate and where it’s expected to go.

How Interest Rates Impact You

The interest you pay on a loan is tied to the Canadian economy and central bank, the Bank of Canada.

How Current Interest Rates Can Affect You

The Bank of Canada typically lowers the national interest rate to help support economic growth and raises it to prevent the economy from accelerating at an unsustainable rate. An elevated national interest rate increases debt and decreases consumer interest in taking out loans. The growing economy of the past few years has led some financial experts to express concern over a potential looming decline. Consequently, the recent spikes in the Canadian interest rate are a preventative measure, according to the Bank of Canada. That way, the Bank of Canada can lower the nation’s interest rate if the economy goes into recession.

Interest and inflation rates have been steadily rising for the past few months, with the current interest rate in Canada hovering at 2.5%. Many factors have influenced the interest and inflation rates, including the war in Ukraine, COVID and supply chain issues. 

How Projected Interest Rates May Affect You

The Bank of Canada will make its next interest rate announcement on September 7, 2022. Most financial authorities expect an announcement of increased rates. The interest rate could eventually rise to 3.25%, with some experts predicting as high as 3.5%. Based on analyses of historical interest levels, the next projected decrease may not arrive until September 2023, although it may occur sooner.

Rising interest rates will directly impact real estate and borrowing costs for home buyers. A fixed-rate mortgage’s interest is set by the national interest rate when the loan is taken out but remains fixed for the duration of the mortgage. An adjustable-rate mortgage, or ARM, varies based on the mortgage terms and a mortgage index. The mortgage index fluctuates along with the economy, sometimes driving a mortgage interest higher than its original rate.

The economy can affect your real estate options whether you’re a potential home buyer or seller. A high national interest rate decreases consumer demand and lowers property value, while a low interest rate increases consumer interest and property value. If you’re looking to buy or sell real estate, request a consult with a trusted real estate agent to determine your best move.

Take Advantage of Interest Rates 

Contact Tsuji Real Estate to schedule a consult. Our team treats clients like family and works tirelessly to meet their real estate goals. We know how interest rates will impact your financial opportunities and guide you to the best possible outcome. Let us help you realize the dream of buying or selling a home in the greater Toronto area.




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