16 January 2018

The poll shows that Canadians are starting to feel the influence of the previous two rate hikes by the central bank and higher rates from some of the biggest banks in the country on mortgages and lines of credit.

Here are some of the interesting poll’s results:

• The average monthly amount Canadians have for their discretionary spending after they paid their bills is $631 – it’s 15% less than in September.
• Almost half of the respondents think they wouldn’t be able to cover all living expenses during the next year without taking on more debts.
• About 40% regret the amount of debt they have piled.

Such disturbing results appeared before the widely expected rate increase by the Bank of Canada on this Wednesday. If the forecasts are right, it would mean even higher debts for mortgage holders and those with a line of credit.

And as many predict more rate hikes in 2018, Laurie Campbell, CEO of Credit Canada, says an increase on Wednesday will certainly affect the psyches of debt holders.

“Canadians can’t pay off their credit card debts, as they don’t have any savings,” – she said. “It’s very disturbing, as credit card rates vary from 19% to 25%, and with such rates another increase could only push the debt growth higher.”

Nevertheless, Canadians aren’t paying down their debts, even in spite of the forecasts of higher rates.

“Although Canadians say they are watching rate hikes warnings closely, they still rely on credit when it comes to household budgets. It may lead to a very dangerous debt trap that will be almost impossible to get out of,” – noted Campbell

She is quite concerned with the pace of the BoC’s rate increases, as Canadian consumers haven’t seen such gains in years.

“I hope people will understand the risky situation many Canadians are in today, with almost half of Canadians being only $200 away from meeting their financial obligations,” – she added. “It’s a wakeup call for everyone.”

She recommends getting rid of the high interest debts first, in case you are facing financial troubles.

If you have accumulated significant amount of high-interest credit cards debt, please talk to your mortgage broker. Mortgage rates are still very low and it might be a good idea to refinance your existing mortgage and get rid of bad debt. In some cases It will free up hundreds or even thousands of dollars monthly for every day expenses or to pay your mortgage faster.