More than half of households are expecting the latest hike to have a negative impact on their finances
Many Canadians are anticipating more serious financial struggles due to the Bank of Canada’s latest policy decision, according to a new study by the Angus Reid Institute.
The survey found that 34% of Canadians are expecting “significant challenges” due to the latest rate hike, while nearly three in five households (59%) said that the hike will have a negative impact on their finances.
Only 10% of Canadians are expecting positive results from the BoC hike, while 22% said that they will not be affected.
“Millions of Canadians are fast getting up to speed on monetary policy this summer against the backdrop of yet another increase to the Bank of Canada’s key overnight rate, the 10th such rise since the beginning of 2022,” Angus Reid said. “A jump of 25 basis points brings the bank’s policy interest rate to an even 5% and puts even more pressure on Canadians struggling to keep up with the cost of living.”
Doug Porter, Chief Economist at BMO noted that the Bank of Canada’s latest rate hike would probably temper the immediate homebuying ambitions of many would-be entrants to the market.https://t.co/QJcWPzTC1A#mortgagenews #mortgagebroker #ratehike #homesales #housingmarket
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 18, 2023
More difficulties ahead for mortgage holders
The Angus Reid study also found that 37% of Canadians with mortgages are finding it difficult to make their payments in the current environment. Of these, fully 89% believe that the latest BoC hike will further “exacerbate” their financial struggles.
Among those who said that their payments are still “manageable”, 60% said that the central bank’s current policy rate “will negatively affect” their ability to make payments comfortably moving forward.
At the same time, a considerable number of Canadians believe that they will be able to eventually adapt to these conditions.
“One in three Canadians (32%) say that the Bank of Canada should hold the rate firm at 5% and await the downstream economic impacts, the target of which is a further reduction in inflation,” Angus Reid said. “Another one in nine (11%) would increase the rate further.”
