Lock in Your Mortgage


Ukrainian Credit Union.

After almost seven years without an interest rates increase, it appears as though the Bank of Canada is finally ready to make a move. The Bank of Canada’s senior deputy governor Carolyn Wilkins has recently given a “hawkish” speech, where she used stronger than usual language about a future interest rate rise: “As growth continues … (the Bank’s) governing council will be assessing whether all the considerable monetary policy stimulus presently in place is still required.”

But what does that mean for Canadian households which are basically drowning in debt? Statistics Canada has just reported that the ratio of household credit market debt to personal disposable income declined from 167.2% in the previous quarter to 166.9% in this quarter. This decline is quite insignificant and doesn’t alleviate the debt burden situation.

The gravity of the debt problem becomes even more vivid if one considers the fact that 66% of that pile (or about C$1.3 trillion) is mortgages. After Carolyn Wilkins’ speech, Canadian newspapers were flashing headlines like “Canadian Mortgage Rates Could Start Rising ‘As Soon As July’” and “Lock in your mortgage if you can’t take the rate-hike heat”. This might be sound advice at this point in the credit cycle.