Compared to last year, more than half (57%) anticipate spending less this holiday season
With no end in sight to rate increases this year, many Canadians are preparing for an even more difficult 2023 because of the steep rise in Canada's benchmark interest rate.
One-third (33%) of Canadians have put off completing a real estate transaction or a large purchase because of this year's quick and consistent rise in interest rates, according to a recent survey of 1,515 people conducted by Dye & Durham among participants in the online Angus Reid Forum.
One in ten people (9%) say they have postponed buying a home this year, and the same number (10%) say they will postpone it next year.
As roughly one-in-five (17%) Canadians anticipate that their home will never again be worth what it was before interest rate increases in 2022, sellers are also preparing for a letdown.
Read more: Home-buying plans have reverted to pre-pandemic levels
Many Canadians are concerned about the ongoing economic uncertainty. Three out of ten (30%) Canadians think that a recession is already underway, while more than half (53%) think that one is likely to start.
With most Canadians (57%) stating they will spend less during the holiday season than they did last year, economic worries are already having an impact on consumer spending plans for the rest of 2022.
“The effects that the one-two punch of rising interest rates and recession worries are having on spending and real estate plans cannot be understated. The average Canadian is concerned about what lies ahead and is bracing for a recession by tightening up their spending and delaying major purchases,” Martha Vallance, Chief Operating Officer at Dye & Durham, said.
Focusing on housing sentiment, the survey found that until housing costs drop, one in ten (12%) Canadians say they will continue to rent rather than buy a home.
Nearly one in ten respondents (8%) predict they will need to take on more debt to afford their present mortgage, while one in five (19%) predict higher rates will cause them to pay off their mortgage substantially more slowly than they initially anticipated.
Read more: Mortgage rate increases spell pain for borrowers, but not the economy
Three out of ten (30%) Canadians claim they’ve had to dip into their savings more than they anticipated this year, while 17% have taken on debt to cover bill payments.
Before the end of the year, at least another 100 basis points (1 percentage point) of interest rate increases are anticipated by one-third (32%) of Canadians.
That forecast comes even as nearly half (48%) believe that rate hikes thus far have not been effective in slowing inflation, and more than half (53%) expect inflation to worsen over the next six months.
