After months of speculation and years of an incredibly low interest rate, the Bank of Canada finally announced that the interest rate would increase. With an economy reaching a more stable point, this rate hike is not surprising. Have you, as a lender, felt any impacts yet.
Obviously the most likely impact of a rate increase is going to be felt when it comes to eligible borrowers. The number of borrowers meeting new interest rate requirements may drop, although that may have already happened as a result of the stress testing already in place. It is highly probable that most successful applications you currently receive are able to meet a higher interest rate.
The biggest impacts may be yet to come, however.
According to the Financial Post, while the Bank of Canada has not released anything saying that another rate increase is coming, Stephen Poloz, governor of the Bank of Canada, noted that “in the full course of time, I don’t doubt that interest rates will move higher, but there’s no pre-determined path in mind at this stage. It’s a data dependent, quarter-by-quarter analysis that we’ll be doing.”
Other private sector economists have also stated that with such a positive outlook for the economy, future rate hikes are highly likely.
For more on the interest rate hike itself, check out Teranet’s Commercial Solutions’ blog here: http://www.teranet.ca/blog/bank-of-canada-raises-interest-rate-with-more-to-come/.
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Find out more today by visiting www.purview.ca.