13 August 2018

That’s one of the reasons why Poloz chose a gradual path up from historically low levels of interest rates, although the economy is already near its capacity.

Benefitting from extremely low rates since 2008, Canadians accumulated a record $2.1 trillion in debt, with mortgages accounting for most of it. As a result, Canada’s ratio of household debt to gross domestic product reached about 100%, says the Bank for International Settlements. It’s the largest number in the Group of Seven.

Nanos report says it’s already affected the demand. The strongest influence is seen in Quebec, with a majority in that province cutting their spending, and among individuals aged 35 to 54, who hold the largest mortgage debts.

However, we have yet to see the full extent of the impact, as only almost a half of mortgages have been affected by higher borrowing costs.

Meanwhile, there are no certain signs of a significant deterioration. The number of respondents saying they haven’t been negatively impacted by higher rates was 56% in May, which is only 3% higher than now. In addition to it, the change is within the 3.1% margin of error for the survey.

The poll was conducted by Nanos on behalf of Bloomberg during the period from July 30 and Aug. 5. These are the results of the telephone and online survey of 1,000 Canadians.