British Columbians are increasingly feeling the pressure of mounting debt and a surging cost of living, according to a new poll.
The poll, conducted by the non-profit Angus Reid Institute found a majority of British Columbians are having a tough time making ends meet as inflation and interest rates stubbornly hold at their highest rate in years.
“That is affecting more than half of British Columbians: 53 per cent of them say they are either struggling or uncomfortable in terms of their ability to meet their daily costs,” Angus Reid Institute president Shachi Kurl told Global News.
The survey found housing costs to be a key stressor for many British Columbians, with more than half of renters (54 per cent) and nearly half of mortgage-holders (45 per cent) polled saying they already found their current monthly payment hard of very difficult to manage.
The number of tenants who said making rent was “very difficult” climbed from one in five last year to one in four this year, while the proportion of owners who said their mortgage was hard to meet climbed from 34 per cent last year to 45 per cent this year.
“What we are seeing is just a persistence, it’s the continuation that really stands out at this stage,” Kurl said.
“Cost of living, inflation, have been an issue going back to during the pandemic … despite the fact that the pandemic is behind us, we’ve now entered a new phase of a pandemic of chronically high cost of living.”
And things could get even tougher, as early as this week — with analysts speculating the Bank of Canada could raise its key interest rate yet again as early as Wednesday amid stubborn inflation and a growing economy.
B.C.’s real estate market, however, has bucked the tough economic trends, leaving some residents in a difficult situation.
“The housing market has been more resilient than people have thought it would be given how fast interest rates have risen,” said Aman Bindra, a real estate and banking associate with KSW Lawyers.
“I think part of that is just low supply … there’s not many listings, they’re still competing in a multiple offer situation, so you are seeing sales prices and number of sales still rising.”
Sales in Metro Vancouver were up 15.7 per cent year over year in May, according to the Real Estate Board of Greater Vancouver. The benchmark price across all home types was down 5.5 per cent year over year, but up 1.3 per cent from April.
Bindra said many buyers had entered the market early in the year anticipating the Bank of Canada was finished with its rate hikes, but that psychology could now be shifting.
“It was kind of a signal to a lot of people that things have stabilized, lets go on the market, lets get a good property before somebody does,” he said.
“But if the Bank of Canada increases rates again, I think people are going to look back and think maybe I shouldn’t be so optimistic, maybe there will be even further rate hikes coming.”
Jennifer McCracken, a partner and senior vice-president with BDO Canada, said Millennials are among those facing the toughest squeeze in the difficult interest rate environment.
“(They’re) the generation that’s really entering the peak phase of their lives where they’re obtaining and using credit,” she said.
“(The Angus Reid poll) was very consistent around debt stress that the respondents who had paid their mortgage and really have obviously substantially reduced housing costs, they reported much lower debt stress than individuals who are paying rent and individuals who are carrying mortgages.”
Amid high housing costs, McCracken said British Columbians are increasingly dipping into lines of credit and credit cards to make up the difference in their household budgets, and falling deeper into debt as a result.
She said that while many people feel a stigma or sense of shame around debt, it is something that can be managed, starting with creating a budget and developing a plan to pay obligations down.
A certified professional can help tailor a solution with tools such as consolidation loans or consumer proposals, she added.
Economists remain split whether the Bank of Canada will raise rates this week.
But even if it holds steady, without a significant economic downturn, a hike may be necessary down the road, meaning more stress for debt-strapped British Columbians — a finding reflected in the poll, which showed a third of respondents expecting they’ll be worse off financially next year.
“This is not going away, and anecdotally we’ve known that for a while,” Kurl said.
“Remember back when the economists were telling us this was “transitory” inflation or it wouldn’t be that bad? Well, we’re now seeing the real-life effects of it. And for millions of Canadians, a significant number of British Columbians, it is that bad.”
The Angus Reid Institute survey was conducted online between May 30 and June 2, among a randomized sample of 2,808 Canadian adults who are members of Angus Reid Forum. For comparison purposes only, ARI says a probability sample of this size would carry a margin of error of +/- 2 percentage points, 19 times out of 20.
