Nearly one in four homeowners say they will have to sell their home if interest rates go up further, according to a new debt survey from Manulife Bank of Canada.
The survey, conducted between April 14 and April 20, also found that 18 per cent of homeowners polled are already at a stage where they can’t afford their homes.
Over one in five Canadians expect rising interest rates to have a “significant negative impact” on their overall mortgage, debt, and financial situation, the survey found.
“The survey revealed nearly one-third of Canadians admit they don’t understand how inflation or interest rates work, close to three in four do not have a written financial plan and almost half do not have a household budget, and that’s particularly telling when reviewing the results of this season’s Manulife Bank Debt Survey results,” said Lysa Fitzgerald, Vice President of Sales, Manulife Bank. “However, Canadians can gain confidence and control of their financial lives by acquiring a better understanding of the impact interest rates and inflation have on their personal finances, and taking that into account when creating their personal financial plans – whether that’s independently or through the support of a certified financial advisor”.
The Manulife survey also found that two−thirds of Canadians do not view homeownership as affordable in their local community.
Additionally, close to half of indebted Canadians say debt is impacting their mental health, and almost 50 per cent of Canadians say they would struggle to handle surprise expenses.
The Bank of Canada remains on a rate−hike path as it tries to tame inflation, which is now at a 31−year high at 6.8 per cent. On June 1, the central bank increased its key interest rate by half a percentage point to 1.5 per cent.
feature image: The Canadian Press