It’s expected that the cumulative effects of rate increases will work their way deeper through the economy – and regular Canadians’ finances through their mortgages and other loan payments – this year.
Jane Kwan started looking more closely at her budget after a mortgage renewal last November raised the interest rate on her loan and saw her payments increase by nearly $400 a month.
Like other Canadians, Kwan’s family finances have been squeezed by the Bank of Canada’s aggressive central interest rate hiking cycle, aimed at bringing down skyrocketing inflation that’s put widespread pressure on people's wallets.hold its key overnight lending rate at 4.5 per cent “Everybody seems to be struggling and a bit worried, including myself,” she said. While she feels more secure in her finances than many, she’s been making conscious changes to adapt to the higher costs of living.BUDGETING AMID UNCERTAINTY
“I'm doing a lot of financial planning for clients now just around cash flow and what areas could be cut in their budget to fund higher mortgage payments or higher debt payments,” she said in a telephone interview. “We don't know how much higher interest rates are going to go and that's put a lot of pressure on people, the uncertainty of it all,” Douglas said.Douglas advised that heavily indebted households who are most affected by high interest rates should prioritize paying down or consolidating debts to help get their payments lower. Unnecessary debt should be avoided at the moment, she added.
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