Bank of Canada rate hikes sending some to food banks

Bank of Canada’s Tiff Macklem announced another rate hike of .25 per cent, bringing up the bank rate to 4.5 per cent. Canada’s central bank rate has increased by 4.25 per cent in less than 12 months.

The impact on everyday Canadians is being noticed as the Canadian Labor Congress (CLC) issued a public statement.

The CLC stated, “that workers are feeling the pinch of higher rent and mortgage payments and rising food costs, with shocking numbers turning to food banks and community organizations to feed their families.”

“Soaring prices for everyday necessities are affecting everyone, while workers continue to see their wages fall further behind inflation.”

“Other than newly arrive Ukrainian families, the largest increase we have seen has been individuals and families that are working in a low-income job,” stated Kerr Street Mission Executive Director Gary O’Neil.

“With the increased costs, many have found themselves unable to provide the healthy food their families need. Children’s programming has also become unaffordable without a subsidy of some sort.

“Our Debt Center Manager has also seen an increase in requests for help. Many families are unable to cover the costs of their debt and the basic necessities they need – without help, their situations will get much worse.”

A family with a $500,000 mortgage amortized over 25 years with a 2.5 per cent mortgage paying $26,868 annually will now pay $39,096 with a variable rate mortgage at 6.2 per cent from a major bank, as they hope rates decline over the next few years.

If they can’t qualify and need to look for the best rate, they could lock into a 5-year mortgage at 5.24 per cent with an annual cost of $35,720. That family was making monthly payments at just over $2,239 and will now be paying $2,976.

Macklem has indicated that the Bank of Canada isn’t projecting another rise, but if annual inflation doesn’t start moving toward its targeted yearly rate of 2 per cent, another rate hike is possible.

If you find yourself in a desperate financial situation, talk to a person you can trust, such as a certified financial advisor, bank manager or accountant. At Kerr Street Mission, there is a Debt Center Manager who can help you work through the financial situation.

Leave a Comment