Nearly one in five Canadian homeowners believe they can no longer afford to pay for their home due to inflation and rising interest rates, shows a survey by Manulife Financial Corporation.
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According to the survey carried out in mid-April, when the key rate was raised to 1% by the Bank of Canada – it has since been increased to 1.5% in June – 18% of owners believe no longer be able to afford their accommodation.
Worse still, if rates were to continue to rise as the Bank of Canada has suggested, nearly one in four homeowners will have to sell their property, the survey suggests.
“Among those polled, less than half said they were prepared for higher interest rates (46%), inflation (42%) and house prices (40%), which highlights how further increases in these elements could be harmful for many Canadians,” reads a summary of the results released by Manulife.
The continued rise in the cost, with an inflation rate approaching 7% in the country, combined with the rise in interest rates have left many Canadians stunned, who seem caught off guard by this new post-pandemic economic reality.
“The poll found that almost a third of Canadians admit they don't understand how inflation and interest rates work, nearly three in four Canadians don't have a written financial plan, and nearly half don't don't have a household budget,” said Lysa Fitzgerald, vice-president of sales at Manulife Bank.
“Over the past few years we have seen significant changes in the housing market, and in parallel we are seeing interest rates and inflation rising. All of this fuels concerns about home ownership, housing affordability and the mental health of Canadians,” she added.
The survey was conducted online by the firm Ipsos from April 14 to 20, 2022 among 2,001 Canadians aged 20 to 69 with a household income of more than $40,000.