Overnight lending rate up

The BoC did raise the overnight lending rate again as we knew they would. Remember we’ve been at the lowest ever, it’s imminent that they will go up. They don’t make it certain they will continue to raise rates.

As I’ve mentioned in the past, we cannot raise rates too quick especially when the US are not. If we jump the gun, past history has told us it doesn’t work and back fires on CDN.

Locking in to a fix rate is still not in the picture for me and shouldn’t be for you. Prime is at 2.75% and most of you are at Prime or below. Locking in today is around 4.2-4.4% depending on your lender. That’s 1.50%+ higher ALL going toward interest.

The strategy portrayed over and over is to increase your payments today to what they would be on a fixed mortgage. This will not only prepare you for any increases, it will knock down your principal much quicker and in the end you’ll be smiling more!

Here’s an article from the web:
The Bank of Canada raised its benchmark interest rate by 25 basis points Tuesday, the second straight time it has done so after keeping rates at unprecedented lows for more than a year.
In its latest policy decision, the bank opted to move its overnight lending rate to 0.75 per cent. The bank had previously raised its benchmark rate to 0.5 per cent in June after having kept rates at emergency lows since April 2009 in an attempt to stimulate the economy and spur lending.
In raising the rate, the bank moved to lightly hit the brakes on a Canadian economy that has shown signs of significant strength in recent months.
But the bank made it clear in its policy statement that it sees Canada's economy recovering more gradually than it did in its previous outlook in April. It now projects GDP growth of 3.5 per cent in 2010, 2.9 per cent in 2011 and 2.2 per cent in 2012.

The bank also made it clear that future rate hikes are not guaranteed.
"Any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," the bank said in its statement.
Further rate hikes can't be ruled out, BMO economist Michael Gregory noted.
"The bank's forward-looking language does not preclude further rate hikes," he said.
"[But] the bank now has more wiggle room to raise rates ... if they want to. And we think they will."
The next scheduled date for announcing the overnight rate target is Sept. 8.

Minimizing your personal debt

Determine if you're in the red or black

Minimizing debt means getting to know yourself better, financially. The first thing you want to do is find your net worth. Knowing your net worth is a valuable tool for monitoring your financial progress from year to year, and ensures you're headed in the right direction. Calculating it is quite simple too. You just need to gather information on what you own and what you owe.

1) In one column list your assets including home equity, cars, valuables, bank accounts and retirement savings.
2) In another column list all of your liabilities including mortgage, car loans, credit card debt and any other debt you may have.
3) Next, total the two columns and subtract your liabilities from your assets

You now know your net worth. Regardless of the amount, or even if it's a negative number, you have a starting point. Record the date on your calculation and go through the same process next year or even in six months. It can be a powerful motivator for reducing debt - a personal budget is a great way to help you achieve your goals.