Economic Uncertainty Troublesome For Canadian Debtholders

For thousands of Canadians across the country, it’s no secret to hear that our national economy is facing an uncertain future. The dollar has broken from its historical ties to oil prices and made impressive gains on the back of red-hot real estate and lending markets – crossing $0.80USD for the first time in fourteen months. However, that might be about to change as housing prices threaten to cool and the Bank of Canada, who earlier this month increased interest rates for the first time in seven years, is expected to increase the cost of borrowing at least once more before the year’s end.

Driven by nearly a decade of incredibly affordable credit, consumers have taken on record levels of debt. While free-flowing spending has been a boom for the economy, a recent survey conducted by Ipsos on behalf of MNP LTD indicates Canadians’ ability to manage that debt may be significantly impacted as interest rates continue to rise. With more than a quarter of mortgage holders already struggling to cover their current payments, a hike in rates could put many home owners on the brink of financial ruin. In fact, more than 70 percent of Canadians believe they would have difficulty coping with a 1 per cent rate increase and almost 80 per cent say they would be troubled to find the additional $4.30 per day to cover their payments.

Major financial changes are coming to households around the country. Consumers should be weary of how much debt they are carrying and what consequences a shift in the market could have on their ability to keep up with financial obligations, let alone an ever-increasing cost of living.

Original articles discussing the Ipsos poll and concern amongst Canadians were published online by msn.com, and Financial Post on July 10, 2017.