Interest Rate Increase Strains Canadian Households

Early in July, the Bank of Canada’s first interest-rate hike in seven years set in motion a complex unwinding of a near-decade-long era of easy money via consumer debt. The key interest rate moved up by one-quarter of a percentage point from 0.50 per cent to 0.75 per cent. While this increase is enough to spur concern amongst Canadians already struggling with debt, the Bank of Canada is expected to raise its key interest at least once more before the end of 2017. This increased cost of borrowing will likely add significant stress to households already carrying record levels of debt and could spell disaster should the Canadian housing bubble suddenly burst. In fact, a new poll conducted by Ipsos on behalf of MNP LTD shows that more than a quarter of Canadian households already feel they are “in over their heads” with current payments and that more than three quarters of Canadians would struggle to cope with an additional $130 per month in interest payments.

Now is the time for consumers to evaluate their lifestyles and borrowing habits and create a detailed plan for paying down both pricey consumer debt and (if possible) even their mortgages things spiral completely out of their control. 

An original article discussing the Ipsos poll and concern amongst Canadians was published online by canada.com on July 10, 2017.