Rising Interest Rates: What it means for borrowers and savers

The swift climb in interest rates has been earning a great deal of attention lately, as it should. While dramatic changes in the financial climate can be anxiety-inducing, knowing exactly what it means for you will diffuse a lot of the stress. There are both challenges and benefits to these higher rates, and Coastal Community Credit Union (CCCU) is here to help you steer your financial ship.

For Borrowers: Knowledge is power

The rise in interest rates primarily affects those with variable-rate mortgages, and it’s a bit more nuanced than just seeing a direct hike in monthly payments. Initially, as rates rise, your monthly payment generally stays the same, but the split between how much goes to the principal versus the interest changes.

Essentially, you’ll be paying down your principal more slowly. This continues until rates climb beyond a certain “trigger” point, at which your monthly payment might adjust to accommodate the increased rates. This approach provides some payment stability, but the specifics can vary based on your mortgage agreement.

For those contemplating a new mortgage or a refinance, it might be a good time to consider locking in a fixed rate. For current homeowners, evaluating your mortgage terms and discussing potential options with a CCCU advisor can provide clarity.

For savers, higher interest rates can translate into better returns on investments. Photo courtesy CCCU

For savers, higher interest rates can translate into better returns on investments. Photo courtesy CCCU

For Savers: The silver lining

Rising interest rates are not all doom and gloom. For savers, especially those invested in Guaranteed Investment Certificates (GICs) or term deposits, this trend can spell good news. Higher interest rates often translate into better returns on savings, making it a favourable time to reconsider and potentially restructure your savings strategy.

Savers within the CCCU community can expect guidance that’s not just based on global economic indicators but also finely tuned to the nuances of Vancouver Island and the Gulf Islands’ economic landscape. And when you invest with us, you can rest assured that your savings are 100 per cent protected by the Credit Union Deposit Insurance Corporation of British Columbia.

Why navigating interest rates with Coastal Community Credit Union is different

In moments of financial flux, it’s comforting to remember that Coastal Community Credit Union is in the business of helping its members do great things. As the largest financial institution based on Vancouver Island and the Gulf Islands, serving more than 120,000 members and clients, Coastal Community is fully committed to its members’ financial health. That means helping members balance the financial needs of today with those of tomorrow, managing their spending, saving and debt, and ensuring they have a plan to reach short- and long-term goals.

Take the next step

Whether you’re looking to understand your mortgage options better or maximize your savings potential, we’d love to talk. With 30+ Island locations and weekday 8 a.m. to 7 p.m. access by phone, CCCU is ready to help you turn financial challenges into opportunities for growth.

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