The Bank of Canada interest rate is staying at 1.75% for March 2019.

On March 6, 2019, the Bank of Canada (BOC) announced they are maintaining the overnight interest rate for the time being.

Their reasons were:

• The slowdown to the global economy has been worse than the BOC predicted – including trade tensions and uncertainty.
• In Canada, consumer spending is down despite employment growth. Essentially, people are spending less but earning more.
• The housing market is also down.
• Business exports and investments have fallen short of expectations.

The next BOC announcement is scheduled for April 24. Between now and then, the BOC will be closely watching “developments in household spending, oil markets, and global trade policy.”

What This Means for You

At first glance this is good news – no interest rate increase means more time to deal with outstanding high-interest debt.

But there is some information that could be concerning.

1. Housing Affordability

According to the BOC, Canadians are earning more but spending less. At the same time, the housing market is softening – so many homeowners may be locked out of the market or have their home equity drop.

Housing affordability in Toronto, Vancouver, and other major cities has been making headlines recently. Having a bigger paycheque may not mean much if your expenses are still rising.

What to do if you’re worried about your property value or accessing mortgage financing:

Talk to a financial counsellor about your home equity position and what your options are. For instance, at DebtCare we offer first mortgages, second mortgages, home equity lines of credit, and more.

2. Unstable Employment

There have also been headlines about precarious employment – meaning more people have jobs, but those jobs are not necessarily stable income. They may be temporary contracts or have fluctuating hours. In these cases, it can be hard to plan for, and stick to, a budget.

If you’re worried about stable income:

Talk to a financial consultant about creating a flexible budget that works for you and about financing for slower periods.

3. Household Debt

The third factor that might be at play is many Canadians are using any extra income to pay off debt. Canadian household debt reached a new high in 2018 — over $2.16 Trillion. When you have high levels of debt, it can be hard to pay it all down. This often causes a vicious cycle of paying for the same bills over and over, especially if you are only making the minimum payment each month.

If you’re worried about household debt:

Talk to a financial consultant about your debt management options. Debt consolidation, home equity, or insolvency filing options – like filing for a consumer proposal or for bankruptcy – can help deal with problem debt in a sustainable way.

Get your finances on track before the Bank of Canada announcement on April 24. DebtCare Canada can help.

Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.