In a move that was highly anticipated for a while, the Bank of Canada chose to increase it's key interest rate to .75% today (July 12th)

It's the first time since September of 2010 that the interest rates have gone up. Back then the Bank of Canada put the interest rate at 1.00%, where it stayed for nearly five years.*

Chief Economist with ATB Financial Todd Hirsch explains what impact this can have on Airdronians borrowing money.

"The prime rate will go up, mortgage rates, borrowing rates, lines of credit, all the costs of those interest rates on borrow accounts will start to rise by an equal amount...for a lot of households that maybe have taken on a lot of debt, and now these interest rates on that debt is going up, it is going to pinch, for sure, certain households and certain inviduals."

Hirsch says that although many will be feeling tight with their debts because of the rate hike, the effect may only be minimal for now.

"It's not going to have an impact in the short run. What will be the longer run impact is if the Bank of Canada continues to raise interest rates over the next two or three years."

In regards to how this affects your mortgage rates or other credit and borrowing interests, it's up to the financial institutions to determine that number.

"They may raise it a little bit less or a little bit more," says Hirsch, "All the banks and financial institutions move in lock-step on these things. Mortgage rates, rates on car loans or lines of credit, they're all going to be very competitive and pretty much the same across the board."

The Bank of Canada held it's interest rate at 0.5% since July of 2015 and will make their next interest rate announcement in the fall.

*http://www.bankofcanada.ca/rates/interest-rates/canadian-interest-rates/

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