Renters in particular are worried about their capacity to service their debts
Nearly six in 10 Canadians (59%) have expressed concerns about the impact of the ongoing rate hikes on their financial situations, according to a new survey by MNP LTD.
This level is the highest point on record since MNP began tracking this metric in 2017.
“After the repeated interest rate hikes this year, it is understandable that Canadians are more concerned than ever about what the impact will be on their finances,” said Grant Bazian, president of MNP LTD.
“Our findings show that renters and lower-income households are more financially vulnerable to the impacts of rising interest rates and the cost-of-living. These groups will need to be particularly cautious with their spending in the coming months to keep themselves out of financial trouble.”
Amid pressure from rising rates, renters were found to be “significantly more likely” to worry about their debt-servicing capacity (63% of renters vs. 48% of owners) and their potential to fall into bankruptcy (45% of renters vs. 27% of owners).
Households with total income of less than $40,000 were found to be the most likely to feel the effects of interest rate hikes (62% vs. 53% of those in the $40,000-$60,000 range and 57% of those in the $60,000-$100,000 range), MNP added.
“For households that have already slashed their budgets and shaved off as many expenses as they can, any future interest rate hikes could put them in a position where they are forced to take on additional debt to keep up with their bills,” Bazian said. “But the cost of servicing that debt is also ballooning as rates rise, making it far more difficult to pay off.”