Rights & Money

Canadians Are Feeling the Effects of Higher Interest Rates

According to a recent survey, half of us are dreading further hikes

By Katrina Caruso

The Bank of Canada has raised interest rates three times since July 2017, and according to the results of a recent survey, half of Canadians fear the effects of more hikes.

More and more Canadians already say they’re feeling the pinch. The quarterly poll conducted by MNP, an insolvency company, revealed that 43% of Canadians—5% more than six months ago—say they are feeling the effects of higher interest rates and are worried that they may not be able to cover their costs of living (47%).

While a third of those polled said they were optimistic that their situation will improve in the next year, 51% said they were afraid that further rate increases would hurt their ability to pay existing debts and a third said they fear higher rates could leave them looking at bankruptcy. Almost half—47%—said they expect they’ll have to go more deeply into debt to cover the cost of day-to-day living. For one thing, according to MNP, almost half of Canadian mortgages will have to be renewed within the year—that means that given higher interest rates, almost half of Canadians will soon have to find a way to make higher mortgage payments every month.

Those most concerned with the rise in interest rates and their ability to repay debt were Millennials (61%)—those 18 to 34 years old; 53% of Gen Xers (35 to 54) expressed the same concern, and the number among baby boomers (55+) was 42%. Millennials were also the most concerned about bankruptcy (45%, compared with 35% of Gen Xers and 23% of boomers.

Compared with the rest of the country, Albertans were most likely to say they were feeling the effects of higher interest rates now and the most likely to be worried about further increases, with residents of Atlantic Canada not far behind in both categories.

The most recent quarterly MNP Consumer Debt Index poll was conducted online and surveyed 2,001 Canadians.

Photo: iStock/Terminator3D.