As interest rates rise, what does this mean for Canadians?

In an ongoing attempt to curb inflation, the Bank of Canada announced another key interest rate hike on Wednesday, increasing rates by 75 basis points to 3.25 per cent.

This is fifth consecutive interest rate increase this year, and for some, the strain on their wallet is becoming unbearable.

“You need more of an income to qualify for the same house at the same price that you used to quality for half a year ago,” said Christopher Audette, a real estate expert with The Group at RE/MAX First.

He adds increasing interest rates to combat inflation is part of the fiscal cycle, and rates will eventually come back down.

“We had increased interest rates, trying to curb inflation, trying to stabilize the economy. But those were followed by lowering interest rates as well, and a lot of the experts are predicting that that’s what’s going to be happening in this market. Having said that, we think we’re going to have more increases before we have decreases,” Audette explained.

This may not be the most prudent time to invest in property. Financial planners such as Taz Rajan at Bromwich + Smith say now is the time to lay low and keep you budget in check.

“Get really good with your own personal budget, know your numbers and figure (it) out,” Rajan said. “Just because my preapproval says I can buy a home for $700,000, realistically, in my real budget, is that payment going to work for me?”

Rajan encourages Canadians to reassess their budgets, taking into account things may get worse before they get better.

“If the interest rate went up another 1 per cent and my payment went up another x number of dollars, am I still gonna be okay? Or is this gonna start to give me anxiety and keep me up at night?” Rajan said.

She adds as the cost of living rises across the country, consumers should keep an eye out for price drops wherever they can find them. She also encourages folks to reach out to a financial planner if they are struggling with money.

“You’re not alone, if you need help, seek help. It’s the most courageous thing you can do,” Rajan said.