You now have roughly six to nine months to get a personal plan together for dealing with higher interest rates. After that, the ride begins. Where it ends depends on how smartly the economy and inflation snap back, but we could be looking at a prime rate of more than double the current 2.25 per cent by the end of 2011. Let's look at four ways you can prepare:
1. Home buyers, lock down your mortgages
If you absolutely must buy a house in the overheated market in some big cities, then consider insulating yourself against rising rates by taking a five-year fixed-rate mortgage. A quick scan of mortgage brokerage websites shows five-year terms priced in the range of 3.69 to 3.99 per cent, while the big banks are advertising specials as low as 4.19 per cent.
Forget the research that shows you'll save on interest over the long term if you go with a variable-rate mortgage. If you're stretching for family cash flow to buy a house, then cost certainty is more important than potential savings.
Published on Tuesday, Jan. 05, 2010 12:00AM EST Last updated on Thursday, Jan. 14, 2010 2:43PM EST
From the Globe and mail