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A lot of personal finance is warning people about risk, and no risk has been talked about more in the past dozen or so years than rising interest rates.

Also, no risk has been more overblown. By me, by economists and others. The expectation of higher rates over the past dozen or so years has been confounded repeatedly by economic disappointments.

As the pandemic grinds on, we’re starting to hear more about expectations for higher rates ahead. That’s why it’s a good time to have a hard realist’s discussion about the rate outlook for borrowers and savers.

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We need higher interest rates because the rates of today are too low to be permanent. They inflated house prices to shocking levels and strangled returns for seniors and others who need to keep money safe while generating some income. Higher rates would be a strong back-to-normal sign after all the pandemic-driven upheaval.

If you’re a borrower, you should prepare for higher rates by the end of next year. Audit your household spending to find money that could be deployed if necessary to cover higher payments on mortgages, lines of credit and loans.

But nagging people about debts using the threat of higher rates is so lame. First off, it doesn’t work. If people feel they personally have economic stability, they will borrow more. We’ve seen that with home buying in the pandemic, and with other kinds of debt in prepandemic days.

Second, using the threat of higher rates to influence behaviour taps into an unpleasant moralistic strain of personal finance. Borrowing is sinful and higher rates are like a wrath of God punishment.

We borrow for all kinds of reasons: because our jobs don’t pay a fair wage and we can’t make ends meet; because of a family emergency such as a job loss; because it’s near impossible to pay for a renovation, a car or a house with cash; because we want to invest in ourselves or in financial assets such as stocks; because it is human nature to sometimes want more than we can afford; and because we’re submerged in messages delivered online and by social media to buy and consume.

Enough with judging people. Let’s cool it on the warnings about an interest-rate reckoning and instead look at what might actually happen in the economy.

The most recent numbers were a letdown – the economy actually shrank from April through June and output remains lower than it was before the pandemic started. The Bank of Canada would have had this development in mind when it projected last week that its benchmark lending rate will remain at the current emergency lows until the second half of next year.

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The Bank of Canada’s overnight rate sets the trend for variable-rate mortgages and lines of credit. If you have those, you’ve got at least nine months of peace ahead of you.

Fixed-rate mortgages are influenced by what’s happening in the bond market. Check out the five-year Government of Canada bond if you want to get a sense of what’s in play for banks in setting five-year mortgage rates.

We began the year with five-year yields more than doubling, which suggested financial markets were convinced rates were headed higher in serious way. That conviction has waned, though. Yields are well ahead of year-ago levels, but off the peak of earlier this year.

The fourth wave of the pandemic has tempered optimism about a return to a normal world where, among other things, growth is sustained and rates can be adjusted accordingly. With no end in sight for the pandemic, economic disappointments remain possible.

Life after the 2008-09 global economic crisis may offer some insight about what’s ahead. There was an expectation that rates would rise from emergency lows, and they did – but in a slow, halting way that had to be interrupted temporarily with rate cuts back in 2015. It’s hard to remember now, but mortgage rates were actually trending lower before the pandemic began.

Normalcy equals higher rates – we’ll get there at some point. But for now, borrowers have some breathing room and savers are stuck. Rates on savings accounts and term deposits continue to edge lower, which is yet another interest-rate disappointment.

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