Interest rates, near historic lows for much of the past two years, are widely expected to increase through the latter half of 2011. The cost of carrying debt, including mortgages, lines of credit and credit cards, will be affected.
“Low interest rates have enticed many Canadians to spend more on credit,” says Stephen Reichenfeld, VP and wealth counselor, Fiduciary Trust Company of Canada. “But an improving economy means lending rates will likely rise. It’s important to take steps today and prepare for potential higher borrowing costs in the years to come.”
Four steps that can help you prepare to come out ahead:
• Reduce personal debt. Do what you can today to decrease your debt load before borrowing costs increase. Review the option to lock in borrowing costs now and consolidate debt at a lower interest rate. If you’re only making minimum payments on your credit cards, start paying more.
• Take a look at your mortgage - do you need to refinance to reduce your monthly payments and consolidate debt at current low interest rates? Do you need to lock in your mortgage from a variable to a fixed rate? These are some of the questions our clients are currently asking and we can help. For a complimentary review of your mortgage situation, contact your Bob Hanscom Mortgage Agency advisor.
• Equity funds. Stocks tend to benefit more than fixed income products like bonds in a rising interest environment. Past market cycles indicates sectors like industrials and technology benefit when interest rates rise.
• Zero percent financing and other incentives often disappear as interest rates rise. Something to keep in mind if you are looking to purchase a vehicle in the future.
Bob Hanscom Mortgage Agency
A Family-Run business since 2000
Bob Hanscom Mortgage Agency
A Family-Run business since 2000
