By Scott Roblin

National interest rate hike causing waves locally

Jul 12, 2017 | 5:17 PM

MEDICINE HAT, AB – Taking out a loan in Medicine Hat could cost you more, following an announcement on Wednesday by the Bank of Canada.

The Bank’s key lending rate was boosted from 0.5% to 0.75% on Wednesday, the first jump in the rate since 2010.

Often a good indicator of the country’s economic state, the key interest rate was decreased from 1% to 0.5% in 2015 following a steep drop in oil prices.

Tim Seitz, the incoming president of the Medicine Hat Real Estate Board, said this will mostly affect home owners with adjustable-rate mortgages.

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“Variable rates, they’ll see an immediate change,” said Seitz. “Banks will be getting a hold of them this month, and their rates will go up $20-30 depending on how big their mortgage is.”

Chris Knodel is a local home-builder, and is also in the process of purchasing his first home in Medicine Hat.

With rates on the rise, he said it was the best time to strike.

“The interest rates going up kind of encouraged me and my wife to consider buying a home sooner than maybe we would have wanted to,” said Knodel. “Just so we can get in lower and before they go up.”

Other areas that will see increases include lines of credit and student loans, with some residual increases in late credit card fees.

TD investment advisor Neil Mardian said while the jump shows a strengthening national economy, that’s not the case for Albertans.

“Alberta is a different story, Alberta is definitely lagging behind most of the rest of the economy,” said Mardian. “With Alberta debt levels being at the highest we’ve seen from an individual consumer perspective, this is very tough for Albertans to swallow this increase in interest rates.”

While some like Seitz are predicting another jump later this year, Bank of Canada governor Stephen Poloz has stated that the Bank is proceeding with caution when, or if, to hike rates due to national debt levels.

Purchasing his home with a fixed rate, Knodel said he’s not having any cold feet about the decision.

“I’m not too worried about it,” he said. “The interest rates are still good in my opinion, so it’s not going to affect whether I want to buy a home or not.”

In terms of savings interest rates, Mardian added there’s not a lot of incentive to keep money in cash now, with the proper move being to let it flow into the local economy.