Atlantic Canadians stressed
Many are concerned about interest rate hikes
A new survey released this week by MNP Ltd. finds that Atlantic Canadians are concerned about the uncertainty of a potential housing bubble and interest rate hikes, adding financial stress to households already carrying a record level of debt.
Half of Atlantic Canadians and 48 per cent of Canadian homeowners are concerned about the impact rising interest rates will have on their finances.
At the same time, 52 per cent Atlantic Canadians, are worried about the potential impact that a decline in house prices might have on homeowners.
“Unemployment in recent years has caused significant financial stress for many,” said Walter MacKinnon, a licensed insolvency trustee at MNP Ltd. “As a result, people have borrowed against their homes or used other forms of credit. What’s troubling is that many are unable to afford this debt; they are not making regular payments against the principal.”
More than one in three homeowners in Atlantic Canada say that they will be faced with financial difficulties if the value of their home goes down. Even if home values don’t decline in the near future, 25 per cent of Atlantic Canadians who have a mortgage agree that they are “in over their head” with their current mortgage payments.
When asked about their personal debt situation, the majority of Atlantic Canadians don’t feel optimistic. Seven in 10 rated their debt situation as less than good, while 22 per cent rated their situation as bad. On a scale of one to 10, from terrible to excellent, Atlantic Canadians gave themselves an average rating of 5.7, the lowest rating compared to other provinces.
“My advice is to plan ahead for the upcoming financial changes, and begin paying down debts if you haven’t already,” said MacKinnon.