Low Interest Rates Good Reason to Lower Debt
In a press release on February 6, 2015 Lucie Tedesco Commissioner Financial Consumer Agency of Canada stated that just because interest rates have gone down, referring to the recent Bank of Canada decision to lower the overnight rate, does not mean that Canadians “should take on more debt.” In fact the low interest rates good reason to lower debt.
To many mortgagers (owing money borrowed on real estate) or those with loans whose payments are calculated based on the Prime rate, which in turn is calculated on the Bank of Canada’s overnight rate, low interest rates can be a double edged sword. Especially if you can’t control your spending; however if you are able to curve your appetite for borrowing, then for you low interest rates good reason to lower debt as you can pay more towards your principal and less towards interest payments.
Commissioner Tedesco went on to say that “Canadians should look at this low interest-rate environment as an opportunity to pay debt down, rather than to accumulate more, even for a larger house, a newer car or a winter vacation.” We should be realistic and be ready for when interest rates will increase.
For its part the Financial Consumer Agency of Canada has developed tools and resources to assist the consumer with managing their debt obligations and can be found at “How to Beat that Debt.”
To read the full press release from Lucie Tedesco Commissioner Financial Consumer Agency of Canada click here.
Trusterra Mortgage is here to help. If you currently have a mortgage and are considering to consolidate your debt, or want to get the lower interest rates that are available currently, contact us to see what options are available for you and we’ll assess your current financial situation to see whether it is worth it for you to break your mortgage to refinance it or not.