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Coping with Rising Interest Rates

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Interest rates have been creeping up. Canadians have been hearing about this for months, but for many people, the reality of higher interest rates is just starting to hit home.

If you're worried about how rising interest rates will affect your finances and what you can do about it, then you’re in the right place. Today’s blog will cover everything you need to know about rising interest rates, including why they're happening and what options are available if they're impacting you negatively.

Changes in Interest Rates

Interest rates fluctuate all the time, but over the past few months, the Bank of Canada (BoC) has been steadily increasing interest rates to manage higher inflation and other economic factors.

Interest rates began rising in early March , growing from 0.25 per cent to 0.50 per cent. Fast forward several months and Canada’s key interest rate has made its way up to 3.75 per cent, and it may not be over just yet. According to an article posted by CTV News , the central bank says rates will need to rise further to curb the decades-high inflation.

Why is this happening? The motive behind the Bank of Canada’s interest rate hikes is linked to decreasing the demand for goods and services that have seen a surge in recent months, like housing.

How This May Impact You

Since the beginning of the interest rate surge, countless Canadians have been affected. Listed below are some of the ways these rising rates may impact you.

Mortgage Rates

For both prospective buyers and existing homeowners, even a slight increase in interest rates can have a significant impact on your mortgage over time.

If you have a fixed-rate mortgage the increase won’t be noticeable right away as you are still locked into the interest rate you negotiated at the beginning of your term. However, it is subject to change once your term ends and it’s time to renew.

If you have a variable-rate mortgage, on the other hand, you could notice a change in as little as a few days, depending on your agreement.  In the case of a variable-rate mortgage, your monthly payments may also stay the same. Instead, more of your payment could go towards interest, which means paying back your loan might take longer than expected.


Inflation can be affected by a number of things including interest rates. When interest rates are low, people are likely to borrow and spend more money, which can disrupt the balance between supply and demand.

When interest rates soar, people tend to save more and spend less. Thus, increasing interest rates can work to rebalance the economy.

Other Consumer Debts

In addition to your mortgage, amplified interest rates impact several other types of consumer debts.

Homeowners who used their homes to secure a loan using a home equity line of credit may also be impacted. Consider revisiting the terms and ensuring that your debt load is still reasonable.

If the Government of Canada had not halted interest from accruing on all Student Loans until March 31, 2023, these loan holders would have also seen an increase in monthly payments.

Additionally, If you purchased a new car prior to the hike, your payments may also be affected.  Similar to your mortgage, auto financing is based on either a fixed or variable interest rate. if you signed up for a variable interest rate, you’ll likely notice your monthly payments increase.

Coping With High-Interest Rates

Unfortunately, the latest hike may not be the last, according to the Bank of Canada. The following tips can help you prepare for additional increases and ease the financial stress that often accompanies higher interest rates

  • Reduce expenses so that you have more money to put down on debts
  • Pay the debt with the highest interest rate first to pay less interest over the term of your loan
  • Avoid taking on unnecessary debt  
  • Avoid taking the maximum mortgage or line of credit that lenders offer you
  • Consolidate high-interest debts, like credit cards, into a loan with a lower interest rate

Debt Solutions Tailored to Your Needs

If you’re currently struggling with debt and worry that rising interest rates will only make matters worse, we can help you turn the page – your story isn’t over yet.

Crawford, Smith & Swallow has been providing debt consolidation help to the St. Catharines area for over 75 years. Our licensed professionals are dedicated to helping individuals regain control of their finances through debt relief programs.

Our Licensed Insolvency Trustees will work alongside you to find the solution that best suits your specific needs. Contact us today or book a free consultation to learn more.

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