A new survey by an insolvency trustee company has found move than 70 per cent of British Columbians rate their ability to cope with a one per cent interest rate increase as “less than optimal.”
The MNP Ltd. survey comes as the Bank of Canada is expected to raise interest rates for the first time in several years.
Seventy-three per cent say they would have difficulty absorbing an additional $130 per month in interest payments on debt.
“Many are borrowing against their homes and using them to finance lifestyles they simply can’t afford,” said MNP’s Lana Gilbertson in Vancouver.
“What’s worse is that many are not making regular payments against the principal, and the threat of an increase in interest rates might make it even harder to make ends meet.”
Gilbertson said people have been living with this “minimum payment mentality” for far too long.
She said people need to start looking at debt loads critically, and factor interest rate changes to see if debt is affordable.
She said for many, it already isn’t.