Archive | In the early 1980s, interest rates reached historic highs

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Archives | At the start of the 1980s, interest rates reached historic levels

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Loan interest rates hit an all-time high in August 1981.

The increase in the key rate by the Central Bank of Canada is causing headaches for many people. The situation has already been worse, especially at the beginning of the 1980s, when this interest rate for loans, and mortgages, shattered records.

August 10, 1981 at Téléjournal, journalist Claude Desbiens confirms that the interest rates charged by private banks for a personal loan vary between 22% and 23%.

Report by journalist Claude Desbiens who confirms that the interest rate in Canada has reached a peak.

The key rate required by the Bank of Canada is 19.89%. We speak at the time of the discount rate rather than the key rate.

In one year, recalls the journalist, the Canadian key interest rate has increased by 7.5%.

In this context , a $5,000 loan costs $450 more to repay.

The meteoric rise in interest rates is causing changes in the behavior of savers.

The latter shun current bank accounts for savings bank accounts that provide much higher returns.

If savers benefit from the rise in interest rates, the situation is very different for many homeowners who are struggling to repay their mortgages.

Report by journalist Réal D'Amours on the consequences for a Valleyfield couple of the rise in interest rates.

On November 20, 1981, journalist Réal D'Amours told Téléjournal the story of a couple faced with a sad reality.

Lise and Roger Richard, from Valleyfield, Quebec, are unable to pay the new monthly payments imposed by the dizzying rise in interest rates.

They have to resign themselves to selling their house below the price they paid for it.

Added to the financial loss for the couple is the trauma of losing their residence.

The Archbishop of Valleyfield, Monsignor Robert Lebel , did he know the situation of Lise and Roger Richard?

The clergyman wrote a letter to the daily Le Devoir in which he was indignant at the borrowing rates of the banks, which he described as usurers and immoral.

We don't know.

On the other hand, the prelate's denunciation raised questions from the show Second look.

Host Myra Cree interviews Monsignor Robert Lebel and journalist Michel Nadeau on their perception and the consequences of rising interest rates in Canada.

On September 20, 1981, Monsignor Lebel and the economics columnist for the daily Le Devoir Michel Nadeau, were interviewed by the host of Second look, Myra Cree.

Michel Nadeau dissects the logic behind the spectacular rise in interest rates.

Behind this bullish mechanism lies the desire of those who have money to limit their financial losses in the face of the explosion of inflation, explains the journalist.

The mechanism aims to penalize those who must borrow, including those who have no money, analyzes Michel Nadeau.

Michel Nadeau fears the social impact that this dramatic increase in interest rates will have.

He apprehends, for example, a considerable rise in the price of housing that the poorest will not be able to afford.

Archbishop Lebel seems dismayed by this explanation.

The prevailing logic prevents a fair distribution of the burden involved in a fight against inflation, he notes.

It's selfishness, observes the prelate. It is the strong who take advantage of the situation of the weak, he adds.

Myra Cree asks if there is a solution in which social justice and economic imperatives could be reconciled.

Monsignor Lebel and Michel Nadeau agree.

A real response to the crisis requires an equitable sharing of the weight of the effort of the haves and the have-nots.

In the first half of the 1980s, the world suffered a major economic recession.

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