The Chief Executive Officer at Steinbach Credit Union says consumers can expect higher loan and savings rates after a hike in the Bank of Canada rate Wednesday. The rate was increased by a quarter of a point to 1.5 per cent. Glenn Friesen says the SCU board will meet Thursday to discuss its response.
"Likely, we'll be going up with our loan rates but we'll also be increasing our variable savings rates at the same time. So whatever we collect on the loans, we'll actually pass on to our savers."
Friesen adds a quarter point increase on a $100,000 mortgage would work out to $250 per year or $21 per month. He notes the Bank of Canada rate is now at its highest point in ten years but is still relatively low.
"This is the highest it's been since 2008. The long-term average would be somewhere around the four or five per cent mark. We're at 1.5 per cent so we're well below that four or five per cent mark."
Friesen says it's hard to know what will happen with interest rates in the coming months and years because there are so many variables in play. He notes there is always a lag between the implementation of higher rates and the understanding of what that has done to the economy, so it will likely take a while before the Bank of Canada considers any further changes.
"They are talking about rates going up further, but there's no guarantee."
Canada's major banks have all announced an increase of a quarter point in their prime rate to 3.7 per cent, effective Thursday.