Increased interest rates are supposed to signal an improving economy. But for millions of Canadians already struggling to keep up with monthly payments, it’s a reminder that their purse strings are only going to get tighter. The Bank of Canada raised its key lending rate on July 12 for the first time in nearly a decade. Already up a quarter of a percentage point from 0.25 per cent to 0.5 per cent and with economists predicting another hike sometime in the fall, this signals an end to seven years of easy and affordable credit. It also leaves many wondering how they’re going to keep up.
According to a recent survey conducted by Ipsos on behalf of MNP LTD, more than a quarter of Canadians already feel like they’re “in over their heads” when it comes to paying their bills and 77 per cent of debtholders say they would struggle to find an extra $130 per month to cover a 1 per cent increase in their interest rates. With higher expenses over the coming months, it is going to be harder to make ends meet. If Canadians don’t start taking steps now to lower their debt, they could be in for trouble.
It’s time for people to start bracing for some major financial changes. This includes reducing spending, paying down credit card balances, and (if possible) making payments against the principal value of mortgages.
An original article discussing the Ipsos poll and concern amongst Canadians was published online on July 10, 2017.
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