Some Kamloops homeowners to pay $300 more per month in interest following interest rate hike

“[The] Bank of Canada had a target of keeping the inflation rate around one and three per cent, now it’s way above the three per cent target… and they want to bring it down,” said Peter Tsigaris, an professor in economics at Thompson Rivers University.

“The only way to bring it down is to raise the interest rates. People start reducing their spending, they will not think about buying a house, mortgages are gonna rise.”

For example, a homeowner with a mortgage of $750,000 can expect to be paying $300 to $400 more per month in interest. With the average Kamloops single family home selling for $790,000 in June, many local homeowners will be feeling the pinch.

Travis Colman with Colman & Associates Mortgage Consultants said his clients are already reaching out for advice following the hike.

“We’re getting a lot of calls today, just people with variable rate mortgages and secured lines of credit, anything that’s gonna be impacted by today’s rate decision,” said Colman.

“[They’re] wondering what they should be doing. Should they be concerned, should they be locking in, how is this going to be impacting their budget,” he said.

Colman said some homeowners may want to consider switching to a more stable fixed rate mortgage, as more interest rate hikes are on the way.

“I think if people are in a variable or adjustable rate mortgage, they should be looking at what the corresponding payment is in a fixed rate — that might be in the five, five-and-a-half per cent area,” said Colman.

“They should probably be saying, can we afford that payment? And people may even want to consider setting their payment there so that when future increases come — because this is not the last rate increase we’re going to see — then they’re already budgeting for that.”

“I think that’s probably the best piece of advice I can give, is make sure you’re budgeting for another per cent and a half, maybe even two per cent increase beyond what we’re seeing today, and ride it out until it does start to normalize back down,” said Colman.

Tsigaris says he doesn’t believe this rate change will trigger a recession.

“We just have to make adjustments with our spending and think carefully in terms of where we spend money because of the raising interest rates,” he said.

“Thats why I’m saying it’s not going to go [to a] recession, probably it’s going to slow down the economy from growth,” said Tsigaris.

“I expect if the inflation rate keeps on at that level they’re going to raise the interest rates again.”

The Bank of Canada is scheduled to make an announcement regarding interest rates and inflation in September.

by Stephanie Swensrude

Some Kamloops homeowners to pay $300 more per month in interest following interest rate hike

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