'It's scary for your average person': Maritimers react to latest rise in key interest rate

It's a rate hike many had braced themselves for. The Bank of Canada upped its key interest rate by 0.75 per cent on Wednesday.

It now sits at 3.25 per cent, and plenty of people still took it as a shock.

"It's scary for your average person, for sure,” said Jenna Lahey, CEO of the Cape Breton Regional Chamber of Commerce.

Lahey said another rise in the key lending rate is tough news in an economically depressed area.

She added that if it's an effort to decrease spending, that’s something we've already seen, thanks to inflation.

"If you have to pay more just to survive, whether it's your mortgage or groceries or fuel, you're spending less money on other things,” Lahey said. “So you'll see entertainment costs coming way down. You'll see businesses that are in those certain fields maybe seeing fewer customers."

Patrick de la Mirande, an economics professor at Cape Breton University, said while the Central Bank is upping its interest rate to try and control inflation -- the move comes with its own problems.

"The biggest impact will be on the debt of some people,” he said. "The cost of loans will increase in the future. People could struggle to pay back their mortgage and in the long run, that could impact the possibility of these people to remain in their house."

Leah Zlatkin, a mortgage broker based in Toronto, says people who already have a mortgage will see an increase in their monthly payment or in the amount of time left in their term.

Zlatikin has some advice for first-time home buyers.

"There are some lenders that are still going to allow you to use yesterday's qualifying rate to qualify today,” she said. “So if you're interested in purchasing something in the next 90 days, get your applications in today."

Experts say while some had already budgeted for the key rate increase, others will suddenly be forced to reassess their spending habits -– something that’s particularly difficult for those in lower-income brackets.

Still, there may be some good news.

"We can expect the last interventions of the Bank of Canada to have an impact on the market,” de la Mirande said. “So we can see a stabilization of the inflation."

De la Mirande added there are signs of that already, but for those feeling the financial squeeze now it may be cold comfort.

He predicts that while the rate of inflation may go down in the not-too-distant future, it may take two-to-three years for interest rates to do the same.