The Bank of Canada has increased interest rates for the first time in seven years, affecting interest rates in the Pembina Valley. The announcement came Wednesday morning.The national bank's rates have increased from 0.5 percent to 0.75 percent, impacting mortgage costs, home equity lines of credit and other loans connected to the prime rate.
"What will happen out of this is you'll likely see a movement up in prime, which is what our variable loans are tied to," explained Larry Davey, President and CEO of Access Credit Union. "So members will see a rate increase of somewhere between fifteen basis points and twenty-five basis points."
A basis point is one hundredth of one percent, used mainly in expressing differences in interest rates.
Davey said they've noted a number of members looking to change from a variable to locked rate.
He added an increase in rates can be a sign of a steady economy, and could strengthen the Canadian Dollar. The move can also alleviate concerns over rates going up in the future according to Davey.
"If there are other issues in the economy, then the dollar could weaken," said Davey. "But if we look at history and general terms, when rates go up the dollar tends to strengthen."
With the economy strengthening, Davey explains the rate increase is a move back to the norm.