‘A big shock’: Canadians feeling squeezed by Bank of Canada’s interest rate hikes

Wednesday's surprise Bank of Canada one per cent interest rate hike is putting continued pressure on homeowners who are seeing increases to their mortgage payments.

The Bank of Canada’s continued interest rate hikes this year — including Wednesday’s surprise one per cent bump — have hit Canadians like Aashti Vijh hard.

In January, the 30-year-old marketing and communications manager was paying about $1,600 per month for the variable rate mortgage she has on her downtown Toronto condo. Now, that monthly payment will be nearly $2,000.

“It’s been a big shock and a big change for me personally,” she told Global News Wednesday, shortly after the central bank’s announcement, which added about $200 to her payments alone.

“I’m also managing the mortgage by myself, so all of these payments come out from my paycheque.”

The key interest rate now sits at 2.5 per cent, a drastic shift from the 0.25 per cent rate seen at the start of the year, as the Bank of Canada tries to tame decades-high inflation that has sent prices skyrocketing.

The bank’s governor Tiff Macklem acknowledged Wednesday that higher interest rates will add to the difficulties that Canadians are already facing with high inflation, but said if inflation becomes entrenched it will be more painful for the economy — and for Canadians — to get it back down.

That comes as little comfort for Vijh. After being forced to adjust her budget to accommodate previous interest rate hikes earlier this year, she says she’ll once again have to find a new balance.

“Primarily it’s going to be cutting down on my day-to-day costs – dining out, groceries – finding places where I can basically cut costs. I’ll put more money towards my mortgage if I can, as well as through my savings,” she said.