Half of Canadians say they are in worse financial position than one year ago
It’s spooky season in Canada with Halloween around the corner, but for many residents the scariest thing that the next few days could bring is another interest rate hike from the Bank of Canada.
New data from the non-profit Angus Reid Institute finds the number of mortgage holders struggling with their monthly payment growing in recent months. One-in-six (15%) in this group say they find the financial aspect of their mortgage “very difficult”, a figure that has doubled from data seen in March.
The Bank of Canada has hiked rates only twice since March, but many are still feeling the shock of the cost of borrowing jumping significantly since the beginning of 2022, when the BoC’s policy rate was 0.25 per cent. Since then, it has risen to five per cent.
While the expectation from economists reading the macroeconomic tea leaves was right that the BoC will hold rates steady this week, that does little to quell the concerns many mortgage holders are facing. With rates as they are, four-in-five homeowners with a mortgage say they are either worried (40%) or very worried (39%) they will face higher payments when it comes time to renew with their bank. Those facing renewal in the next 12 months are spooked more than others, with a majority “very worried” (57%) their monthly payments will rise significantly.
Overall, Canadians are more down than usual on their financial situation and prospects. Half (49%) say they are in a worse financial position than they were last year, while 35 per cent expect to be in a worse position a year from now. Both figures tie records seen in more than 13 years of tracking data from the Angus Reid Institute.
The survey also says more than half (54%) say it is difficult to feed their household given the cost of food currently.
While those on fixed rate mortgages are more likely (57%) to find their monthly payments easy to handle at the moment than those with variable rates (50%), they are more likely to say they are “very worried” about what their next mortgage renewal might bring (43% fixed vs. 29% variable).