More people fear home payment struggles due to BoC rate hikes

Keeping a roof over your head is a basic but essential requirement, but after more than a year of interest rate hikes many Canadians are finding it harder.

With rates now at 5% and the potential for them to move higher during the rest of this year, one third of respondents to a newly released Angus Reid Institute poll say they expect significant challenges resulting from rate hikes.

Mortgage holders have seen their costs surge and the recent CPI data showed a 30% year-over-year increase in this element of inflation, and 37% of respondents say they will struggle to keep up payments. Even among the half of poll participants who are managing so far, 60% say the latest hike will make it harder to keep mortgage payments in the ‘comfortable’ zone.

Renters are also finding it harder to stay on top of household finances with 45% saying they are finding it tough to pay their rent. Two thirds of respondents say their own financial situation has worsened due to the latest rate hike earlier this month, the 10th since March 2022.

Personal finances

Overall, six in ten people say that higher interest rates will negatively affect their finances, around two in ten say it will not, and one in ten expect an improvement due to increased rates.

Grocery costs are a major concern with half of respondents saying they difficult to endure, with almost two thirds of those saying they are struggling having household incomes of $50,000 or less.

Among higher income groups, around one third of those with a household income of $50,000-199,000 say interest rate hikes are having a significant impact on their finances, along with 27% of those in the $200K+ group.

Despite the challenges for so many Canadians, respondents to the poll are split on whether the BoC should lower or maintain rates.

One-third (36%) would lower rates, 32% would maintain the status quo and assess the effect of the latest increase and just 11% would raise rates further.