4 In 10 Canadians Can Not Cover Basic Expenses Without Going Deeper In Debt
Back on July 13, when the BOC hiked rates by 25bps to 0.75% – its first rate hike in 7 years – followed by another unexpected rate hike in September, we documented some troubling trends among Canadian households, including the record household debt-to-income ratio…
… the sliding average hourly wages…
… as well as the unprecedented Canadian housing bubble which puts US home prices to shame…
… followed by a just as troubling observation that Canadian reliance on housing has never been greater in the form of loans secured by property reaching an all time high…
… we warned that the combination of rising interest rates and Canada’s record reliance on debt, would be a dangerous combination.
Our fears were confirmed three months later, when BNN reported that a survey released yesterday found that almost half of Canadian households don’t feel financially prepared for further interest rate increases.
According to the Ipsos poll, conducted on behalf of MNP, 40% of respondents said they fear ending up in financial trouble if rates go up much higher, with one-in-three already feeling the impact of higher rates.
“It’s clear that people are nowhere near prepared for a higher rate environment,” MNP President Grant Bazian said in a release. “The good news is that there seems to be at least the acknowledgement now that rates are going to climb which might make people reassess their spending habits – especially using credit.”
It gets worse: 42% of respondents said they don’t think they can cover basic expenses over the next year without going deeper into more debt. The same number said they’re within $200 of not being able to cover monthly expenses.
…click on the above link to read the rest of the article…
