Potential interest rate hike could spell trouble for some Canadians

Expect some sort of an impact to your bottom line, if the Bank of Canada follows through with an interest rate increase.

University of Calgary School of Public Policy economist Dr. Ron Kneebone doesn’t believe it’s a question of if, but when.

Kneebone says an increase in the benchmark rate will cost the average Canadian more to carry their mortgage.

His best advice, try and lock in a low interest, long term rate and be careful about borrowing moving ahead.

“You have to recognize that interest rates are not carved in stone, that they rise and fall, and so you’re gambling when you borrow money, you’re gambling on interest rates not going up dramatically because if they do it might start to hurt,” he said.

The long-time economist fears many Calgarians who are living on the edge as “house poor” may find themselves at risk.

“You bought yourself a large house, you’re carrying a large mortgage and it made a lot of sense to do that when interest rates were low because you could afford it but now with interest rates going to go up those mortgage payments are going to start to bite,” he said.

There is good news, if you’ve invested in government or corporate bonds, it’ll likely mean a higher pay out once they mature.

If the Bank of Canada moves ahead with the hike, it would be the first increase in nearly seven years.