“What to expect from rising interest rates” via The Star

Consumers who locked in their mortgage last fall or summer might be feeling smug following Wednesday’s increase in flexible loan rates.

But for first-time buyers and home owners looking to renew there is nowhere to hide from a rising interest rate environment.

The big Canadian banks increased their fixed-rate mortgages to 5.14 per cent from 4.99 per cent last week, even before the Bank of Canada announced the quarter per cent increase that triggered the rise in variable loan costs.

“The fact is, (people) have been incredibly lucky in terms of mortgage rates for the last eight years,” said Laurence Booth, professor of finance at the University of Toronto’s Rotman School of Management.

He reminds his students of his own experience, which included a variable rate mortgage of 24 per cent in 1981, during a period of volatile interest rates.


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