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Rates Don’t Rise

Rates Don’t Rise

So we continue to live in a creditor’s Utopia with the Bank of Canada keeping their key overnight rate at 1/2% for now.

Those who carry debt are now dancing in the streets, knowing that their debt rate will not go up (the Government might be one of those debtors who are celebrating too).

Interestingly the banks are starting to raise their mortgage rates for longer-term Mortgages, which suggests the banks think the interest rates may start going up sometime soon, or they figure they can make money off folks by raising their rates.

The Bank of Canada’s statement was:

Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target.

So will these rates continue until mid-year next year? Good to know, guess I should dump my Bond Mutual Fund in March of next year then? It’s good to keep that in mind too.

Living La Vida Loca de Deuda

To paraphrase Mr. Ricky Martin, let us not all continue to live the Crazy Debt Life, let us take advantage of this break in interest rates to pay off our debts and get our Personal Finance life back into an orderly state.

Yes, for every $50 extra you pay off on your debt at this low rate you may only see $2 pay back for the year (assuming a 4% rate), however, if rates double (or more) in the next 2 years, what then? Kill the debt demon while it is weak. If you wait too long it might find more strength!

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