Many Canadians are anxious about the long-term effects of borrowing spree in the low rate environment
The vast majority of Canadians (82%) said that they will be more careful with how they spend their money amid the growing possibility of interest rate hikes, according to a poll by MNP Debt.
More than half (52%) also expressed concern about the impact of rising interest rates on their financial situation, and 44% told MNP that if interest rates go up as they fear, they might end up in financial trouble.
Thirty-five per cent of respondents said that they are anxious of rising interest rates pushing them towards bankruptcy. Younger Canadians and households with income under $100,000 are the demographics most likely to say that they will be in financial trouble should a rate hike take place.
Read more: Will inflation force the Bank of Canada’s hand on interest rates?
The widespread apprehension is rooted in the borrowing spree that took place during the pandemic. Nearly half (49%) of respondents said that in the prevailing environment of record-low rates, they were more relaxed than usual when it comes to carrying debt. For 58% of Canadians, low interest gave them the opportunity to make purchases they might not otherwise have been able to afford.
“Households are struggling more and more with the rising cost of living. With the price of necessities increasing, some may take on more credit to make ends meet while others will have less room in the budget for debt repayment,” said Grant Bazian, president of MNP.
