Economic Trends that affect you!

Mortgage rates may rise


Variable mortgage rates are already starting to creep up, and fixed rates could soon follow if Wednesday’s higher-than-expected inflation numbers turn out not to be a fluke, says mortgage expert Robert McLister.

Canada’s inflation rate hit 3.1 per cent in August, driven by rising food and energy prices, Statistics Canada revealed Wednesday. Even the so-called core inflation rate — which excludes food and energy — hit 1.9 per cent.

“Keep your eye on inflation. If the core rate goes above 2 per cent for a couple months in a row, then we’ll start to hear (Bank of Canada governor) Mark Carney talk about cooling things down,” said McLister.

Raising interest rates is a tool used by central bankers to slow down an economy, the thinking being that if borrowing becomes more expensive, less money is being spent, resulting in less economic activity.

Already, said McLister, the spread between fixed rates and variable rates has dropped to less than one per cent, as banks eliminate much of the discounting they give on variable rates.

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