A third of Canadians feel pinch of rate rise

Survey finds 70 per cent will now watch spending, 4 in 10 people fear financial trouble

One in three Canadians say that they are already feeling the effects of increasing interest rates, a new poll suggests.

The survey carried out for insolvency firm MNP Ltd. also found that four in 10 of those queried say that if interest rates go up much more, they are afraid they will be in financial trouble.

“It’s clear that people are nowhere near prepared for a higher rate environment,” MNP president Grant Bazian said in a statement.

Seven in 10 say that with interest rates headed higher, they will be more careful about how they spend their money.

The survey of 2,005 adult Canadians was conducted online by Ipsos for MNP between Sept. 18 and Sept. 21.

The Bank of Canada has raised its key interest rate target twice this year to 1 per cent, moves that have prompted the big banks to raise their prime lending rates.

Increases in the big bank prime rates push up the cost of variablerate mortgages and other loans such as home equity lines of credit that are tied to the benchmark rate.

The Bank of Canada is expected to make its next rate announcement Wednesday. Economists expect no change to its overnight rate target.

Household debt has been identified as a key risk to the economy by the central bank and other experts. The amount Canadians owe compared with their disposable income hit a record high in the second quarter.

Statistics Canada said household credit market debt as a proportion of household disposable income increased to 167.8 per cent, up from 166.6 per cent in the first quarter.