Canadians are in debt. It is a well-known and troublesome fact that, as a nation, Canadians owe about $1.70 for every dollar they take home.
In a recent, week-long series theCBCtook an in-depth look at Canadians and debt. It showed two things: Canadians are determined to manage their debt and meet their obligations, and they are worried about how they will do that as interest rates rise. People who owe money on their homes are particularly concerned.
In an online survey of 1,000 homeowners nearly three quarters of those who have debt on their home (mainly mortgages) say they are worried about increasing rates. Nearly 60% of them say they only have about $100 of wiggle room in their monthly debt payments before they will have to change their spending habits to make ends meet. Nearly 20% say they have no room for any increase.
Nonetheless the CBC survey found that most respondents range between “somewhat” and “very comfortable” with their current, monthly debt payments. But they may have a false sense of security.
The survey also found that less than a quarter of respondents could correctly calculate the higher cost that will come with higher interest rates. The CBC used the example of a $400,000, 20-year mortgage with a fixed, five-year rate of 3.3%. Adding 2% to that, as required by theB20 stress-test, amounts to a significant, $400 a month increase in borrowing costs.