As interest rates rise and inflation surges, almost 40 per cent of homeowners say they are concerned about their finances, according to a recent survey.
The poll, conducted by Leger on behalf of RATESDOTCA, the survey of 1,513 Canadians (967 of which are homeowners), found that Canadian homeowners are feeling the financial pinch, especially those that bought during the scorching housing market of the pandemic.
In fact, of the homeowners that are concerned about their finances, 50 per cent bought their homes less than two years ago.
“Inflation is pushing the cost of essential goods higher and rising interest rates are squeezing anyone with a variable mortgage rate, HELOC or other floating rate mortgage product,” John Shmuel, managing editor of RATESDOTCA, said in a statement. “Many homeowners will be searching for ways to cut their household budgets to accommodate this hike in expenses.”
The poll also found that 39 per cent of homeowners are “concerned” and 18 per cent admit to being “very concerned” about their finances.
Younger Canadians aged 18 to 34 are more likely to say they are concerned about their finances. As well, 62 per cent of this age group are also first-time homebuyers.
However, those aged 55 and older are more likely to say they are not concerned about their finances.
Meanwhile, 73 per cent of Canadian homeowners say they can save some of their monthly income; although, few can save more than 10 per cent.
Among those who report being able to save, 73 per cent can save one to five per cent of their monthly income.
And less than half, 49 per cent, say they can save six to 10 per cent.
Yet, only 30 per cent are able to save more than 10 per cent each month.
The majority of Canadian homeowners say they can only afford between $100 to $100 in extra costs each month; 45 per cent say they can afford between $201 and $500 extra a month; 19 per cent can afford between $501 to $1,000 a month; and only nine per cent can afford more than $1,000 a month in extra costs a month.
Earlier this week, the Bank of Canada raised a second increase in Canada’s interest rate in two months.
The central bank raised its policy rate by half a percentage point to 1.5 per cent — just a quarter-point below its pre-pandemic level — and warned that rates will need to ratchet up further to rein in inflation.
In response, the bank said it is “prepared to act more forcefully” as it forecasts higher consumer prices to come this year.
- With files from The Canadian Press