The Bank of Canada has increased the rate it charges other financial institutions for the first time in seven years.
The trend setting Central Bank Rate jumped by 0.25 per cent this week to 0.75 per cent. What does that mean for you and me?
"Our prime lending rate has increased by that quarter point," reported Jason Blanke at the Drumhelelr Chinook Financial branch. "The Bank of Canada rate went up to 0.75 so our prime lending rate goes from 2.70 to 2.95 effective today (July 13, 2017)."
The prime rate is what the banks charge their best customers, but it's the other loans, like mortgages, that concern most of us.
"It will affect some of our mortgage rates and it could affect them down the road, depending on what the Credit Union or the financial institution that the people deal with decide" admitted Blanke. "(However) as of this time, it hasn't changed any of our mortgage rates."
Those that would be immediately affected are variable rate mortgages. Fixed terms remain as is, at least until renewal time, when they will go up. Home equity lines of credit are also affected.
"Interest rates are still quite low and that's a great thing for when you're borrowing money," noted Blanke. "The other side you also have to look at is when you're investing money you'd like to see interest rates go up."
A statement from the Bank of Canada governor says the rate hike was a reaction to a strong national economy and hints a second rise of a quarter per cent could be forthcoming in October.