On September 6, 2023, the Bank of Canada held its key policy rate steady following a series of 10 hikes that led to a peak of 5.00% last July. You would have to go back more than 20 years, to 2001, to find rates of 5.00% or higher in Canada. 

In the wake of a major recession and runaway inflation, the key rate soared to a high of almost 21%. 

Nonetheless, for many borrowers this is a rather brutal wake-up call: after the past couple of decades, we’re no longer used to such high rates. In fact, for the whole decade from 2010 to 2020, the key rate hovered between 0.25% and 1.75%. 

It’s important to keep in mind that the key rate has an impact on interest rates for various kinds of borrowing, including mortgages and lines of credit. On the other hand, it also influences the interest rates offered on savings products, such as deposits and guaranteed investment certificates. 

If your debt load is starting to concern you, feel free to contact your advisor for help setting up a structured debt-management plan. And if, on the other hand, you’d like to take advantage of the situation, your advisor will be able to recommend solutions appropriate for your needs.