If you have a variable rate mortgage, only 150 days left to do something about it.

In the third week of July, interest rates will rise. Prior to the last 24 hours that was a good guess. Now it’s a cinch. The pointy heads at the Bank of Canada might even surprise us by popping the cork sooner, but I’m bettin’ Mark Carney will want to turn this into a spectacle. So July it is.

Here’s why you need to lock your mortgage away in May or June:

• Inflation is back. The core rate is now 2% which doesn’t sound like much but it is. That’s about how fast the economy is growing, which means it’s not growing at all in terms of the money supply. And 2% is at the very top of the little chart Carney carries in his wallet showing allowable inflation. So, up she goes.

• The US Fed has now broken central banker virginity. By raising its discount rate a quarter point Thursday, Ben Bernanke is clearly signalling the US is starting out on the path back to ‘normal’ interest rates after months of free money. The move this week does not raise consumer loan costs, just the price of money on Wall Street. But it’s an in-your-face signal of what the coming months will bring.

• And this happens as we get more news each day that Canadians and Americans are completely pigged out on debt. All this cheap money not only created the Canadian housing bubble which officially doesn’t exist, but it’s raised family debt levels 6% in a year and turned mortgage indebtedness extreme. We now owe $1.45 for each dollar we earn. The federal fiscal situation is appalling. Young homebuyers think nothing of using 95% leverage to buy a house. And these absurd interest rates have given us a 19% increase in house prices in one year, kneecapping the middle class.

So, rates will rise. Go ahead, bet the cows on it.

But the question is, by how much?

That one will have to wait for an answer. But if the housing bubble continues to inflate, combined with the inflationary impact of the HST starting on Canada Day, you can expect  decisive central bank action between then and the end of 2011.

As I have said too many times to be interesting, we are on our way back to the normalized five-year mortgage rate of 8%. The ETA: 2014. Just in time for all those who bought at the top of the market in 2009 and 2010 to renew their home loans.

And won’t that be a riot.