Interest rate hike a first in 7 years, but nowhere near rates of the 1980s
30 years ago, double-digit interest rates led to businesses going under
The Bank of Canada raised its key interest rate for the first time in nearly seven years on Wednesday, putting some Canadians — especially homeowners — on alert.
The rate inched up a quarter of a percentage point to 0.75 per cent, up from 0.5 per cent.
The Bank of Canada said the increase comes as the economy is robust, but the move means consumers will likely have to fork over more money for variable-rate mortgages and lines of credit.
I know this looks like a small increase, but relativity says different.<br>This is a 50% increase.—@667TheDoctor
There goes the sellers market—@haltam_h
I remember mortgage rate at about 16%, so this is nothing. Hey, if you can't afford it, don't own it!—@waynebarrett48
Although this marks the first increase since September 2010, it is nowhere near the rates of the 1980s. The interest rate peaked at 21 per cent halfway through 1981 at a time when thousands of companies went out of business, including right here in Ottawa.
In a news report from the CBC archives dating back to Sept. 20, 1981, a CBC News reporter explains how a popular café on Elgin Street was one of the casualties of the soaring borrowing rates of the '80s.
The current rate hike wasn't all bad news. Higher rates boosted the Canadian dollar almost immediately and holders of savings accounts will also see slightly higher returns.
CBC News' Pete Evans breaks down the pros and cons of the Bank of Canada's rate hike in the video below.