Lenders in Sudbury, Ont. say interest rate hike hits homes and cars hardest

A Sudbury, Ont., mortgage broker and a car dealer say it's getting harder to make big purchases due to the Bank of Canada's latest interest rate hike.

The bank raised its benchmark rate by 25 basis points early this week, the highest increase in over two decades for northern Ontario.

Trina Tallon, mortgage agent for Neighbourhood Dominion Lending Centres, said the current five per cent interest rate is unwelcome news for anyone waiting to spend.

"We never expected to be in this position," she said.

According to Tallon, this marks the tenth increase this year, and each one leaves fewer savings in people's pockets.

The latest increase also forces homeowners to put more money on interest and have little to no principle repayment, she added.

"Some folks have had to sell their ATVs or their quads and get rid of the loan in order to be able to afford the house that they want to get because that [increase] affects how much they can afford," Tallon said.

She added lending in Sudbury will also worsen, at a time when housing and financial stability are harder to come by.

Allen Somers, a business manager at I Need a Car Sudbury, said the increase almost doubled their lowest rates for a car.

"A year ago, we could get 3.99 per cent and now you can't even get lower than seven per cent," he said.

Somers said though the demand for cars is still high in Sudbury, they've noticed customers second guess a purchase with the new minimum rates.

"People need cars," he said.

"The best thing you can do is eat away at the interest is if you can put more money down on the loan, so the interest gets taken away faster."

Tallon and Somers both said they hope the increase leads to lower prices on consumable items later on.