Results of a recent cross-Canada Ipsos poll conducted by MNP Ltd. show that Canadians in general and Ontarians in particular are concerned about continued increases in interest rates. One third of respondents said that they are worried that higher interest rates could push them closer to bankruptcy – up 6% from the same poll three months ago. More than half (52%) worry about whether they will be able to pay their debts, and 44% say that they could be in trouble financially if rates go much higher.
The news isn’t all bad, though: 83% are determined to reduce their spending, and 52% expect that their debt situation will get better over the next 5 years.
MNP LLP (nee Meyers Norris Penny) is one of the biggest chartered accountancy and business advisory firms in Canada. MNP Ltd is a subsidiary of MNP LLP focused on bankruptcy. MNP has been conducting these debt surveys on a quarterly basis for some time now.
While the survey is about consumer debt and not mortgage debt, it clearly indicates that rising interest rates are having a significant effect on both consumer psychology and spending plans. It seems clear (if it wasn’t already so) that the housing market will continue to feel the effects of rising rates, not just in terms of the shift from houses to condos, but also in a more general reluctance to make any move at all. This could mean a continued fall in the volume of homes sold, even if prices continue to be buoyant: current homeowners will be somewhat more inclined to stay where they are and make their current home work, and buyers may become somewhat more hesitant to make that first purchase.