As predicted, the Bank of Canada raised the prime rate by a quarter, officially making it 2.5 per cent, and as predicted, Canada's chartered banks followed in toe within hours of the news.

As of June 3, the rate to borrow in Canada has gone up, while other G7 countries such as Italy, Germany, Japan, France, the United Kingdom and the United States don't expect any such raises until next year at the earliest. Analysts feel this is only the beginning of a string of incremented rates hikes by bank governor Mark Carney. Canadians won't know if there will be additional rate hikes until the next announcement date, which is scheduled for July 20.

Banks feel that a quarter-point hike to 0.50 per cent is minimal and will not have much of an impact on consumers borrowing. Canadians who have longer fixed-term mortgages will most likely remain unaffected since these rates are closely tied to long-term bond yields. However, for Canadians who do feel the financial pinch from the increase, it is suggested that they may want to extend their mortgage terms or pay down less principal.

Many Canadians who opted for the variable mortgage are still happy with their rates noting if they were locked into a fixed-rate mortgage, they would be locked in at four or five per cent. Most people who opted for variable terms saw them locked in at 1.5 per cent, and now with the increase, they are sitting at 1.75 per cent, which makes for an average increase of about $40 per month.

The Bank of Canada noted that the interest rates in Canada remain exceptionally low and that Canada's economic growth has been unfolding as expected. Monday's numbers released by Statistics Canada showed Canada's economic growth jumped by 6.1 per cent in the first quarter of 2010.

A concern still remains for many Canadians as record debt levels are being maintained by many consumes. Liberal Leader Michael Ignatieff expressed concern about the ability of Canadians to pay their mortgages if rates keep rising stating, "Millions of Canadians are already spending over 50 per cent of their income on paying for their house, and we're very concerned this is the start of a ratchet effect that's going to put the squeeze on middle-class families."

Economists expect household spending to moderate due to the interest rate hike, but they are also expecting business investments to fill many of these gaps. Most Canadians will adjust to the new rate increases by cutting additional spending in much the same way they got through the recession, but that does not mean many won't be left cash-strapped.

If you are in need of some additional money or feel that consolidating current bills will help see through this tough time, but have been declined by the big banks due to a bad credit rating, there are many private lending institutions that can help. Many offer consolidation loans, car title loans and bad credit loans when traditional banks are not an option. Researching the right lender for you will ensure that you get the best loan for your unique situation.