Canadians ‘nowhere near prepared’ for interest hike
Four in 10 people say they would be in dire straits financially, poll finds
TORONTO Four in 10 Canadians say that if interest rates rise any further they fear they will be in financial trouble, a new poll suggests.
The survey conducted for insolvency firm MNP Ltd. also found one in three Canadians say they are already feeling the effects of increasing interest rates.
“It’s clear that people are nowhere near prepared for a higher rate environment,” MNP president Grant Bazian said Monday.
The results of the survey, conducted online by Ipsos for MNP between Sept. 18 and Sept. 21, comes after the Bank of Canada raised its key interest rate target twice this year. The moves by the central bank in turn prompted the big banks to raise their prime lending rate, pushing up the cost of variable-rate mortgages and other loans such as home equity lines of credit that are tied to the benchmark rate.
Borrowers with fixed-rate mortgages will have seen no change in the cost of their loans, but rates for new fixed-rate mortgages and those seeking to renew their mortgages have also moved higher in recent months.
The survey of 2,005 adult Canadians also showed that seven in 10 say that with interest rates headed higher, they will be more careful about how they spend their money. However, 42 per cent of those queried say they are $200 or less away from financial insolvency, with little cushion to pay unexpected bills or expenses at the end of the month.
“To get that nice house on a nice street that is big enough to put kids in it, they are just absolutely leveraging themselves to the hilt,” said Jamie Feehely, managing director of Canadian structured finance for ratings agency DBRS.
The online survey cannot be assigned a margin of error because it does not randomly sample the population.