Marketing Monthly: What to do when interest rates rise (March 2022)
In this issue:
- Interest rate hike should prompt a review of your financial plan
- Canadians concerned how higher interest rates will impact their finances
- The fever breaks: Canada’s housing market will cool but stay strong in 2022
- How to invest in an era of rising rates and living with COVID
Interest rate hike should prompt a review of your financial plan
Interest rates have been near all-time lows for awhile now but that all changed on March 2 when the Bank of Canada (BoC) hiked its benchmark interest rate to 0.5 per cent.
While the BoC was quite vocal in past that hikes were coming, its statement March 2 acknowledged inflation is heating up even faster than anticipated, which indicates it may be more aggressive with more hikes in the near future.
While moving from 0.25% to 0.5% is not a large increase in itself, this move is expected to be the first of a series of rate hikes this year, an attempt to tame inflation that has risen to its highest point in decades. This means it is time to revisit your financial plan.
Canadians concerned how higher interest rates will impact their finances
Never before have interest rates been low for so long, but now, there is growing speculation that on Mar. 2 the Bank of Canada will start the first in what could be a series of rate hikes.
Canadians who are already feeling the financial squeeze at the gas pumps and facing rising food costs in the grocery aisle may need to prepare for higher borrowing costs on variable rate mortgages and lines of credit.
The fever breaks: Canada’s housing market will cool but stay strong in 2022
Even after shattering all sorts of records in 2021—for high sales and prices and low inventories—Canada’s housing market isn’t about to buckle. Plenty of unmet demand remains and will continue to fuel tremendous activity across the country. Still, we expect the Bank of Canada’s rate liftoff to turn down the market’s heat in 2022 as deteriorating affordability sends buyers to the sidelines. Higher interest rates and the likelihood of new anti-speculation measures will also prove a tougher proposition for investors.
How to invest in an era of rising rates and living with COVID
Being a buy-and-hold investor isn’t easy these days.
Markets continue to be volatile, and we recently learned that even mega-cap stocks — like Netflix and Meta Platforms — can deliver painful double-digit losses in a single day.
To help our readers wrap their heads around the mania, MoneyWise recently sat down with CNBC contributor Michael Farr — founder and CEO of wealth management firm Farr, Miller & Washington — for his thoughts on the current market environment.
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