Rising Inflation Rates Unsurprising With Record Interest Rates: Kamloops Mortgage Broker
Economic stimuli such as government support, including the CERB, as well as historically low interest rates have helped to increase demand in the housing market, for example.
âWhen the Bank of Canada can stimulate the economy, as it has over the past two years, and stimulate that additional demand for money – for mortgages or for housing or whatever it is? ‘other – supply is a real problem,’ says Colman. “To broaden that to inflation in general, you look at other complications from COVID [such as] supply chain issues.
Colman says the consequences of low interest rates like inflation are not always easy to identify in the short term. With the Bank of Canada meeting next week to discuss interest rates, which are set to rise, people who borrow money at variable rates could soon experience a financial shock.
âYou bring people in and they normalize their budgets. They take over the vehicle payments based on what their good, small mortgage payment is right now, âColman said. “The problem is in three years, in four years when we will see the first [interest rates] up to 3.95 [per cent], where it peaked in 2018, we’re looking at payments of $ 300, $ 400, depending on the mortgage amount, higher than what people are budgeting for or making financial decisions at right now. “