More than half of BC residents feeling pressure from rising interest rates, poll finds

“The affordability crisis, driven by the rising cost of living and interest rates, is already having an impact on British Columbians” — Linda Paul

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An affordability crisis is looming in British Columbia, as more than half of those polled already say they are feeling the pressure of rising interest rates and soaring costs of living, according to a new report from Ipsos.

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MNP’s quarterly Consumer Debt Index shows that 53% of British Columbians say interest rate hikes have hit their bottom line, a jump of six percentage points from the last report in December.

With further rate hikes expected, 60% say they are worried about their ability to repay their debts, up three points; and 50% (up four points) worry they won’t be able to cover their living expenses this year without taking on more debt. Worryingly, more than a third (35%, up one point) say rising interest rates could bring them closer to bankruptcy.

“The affordability crisis, driven by the rising cost of living and interest rates, is already impacting British Columbians,” said Linda Paul, licensed insolvency trustee at MNP, which commands the Ipsos poll.

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“Household budgets are contracting but at some point – especially for those already in the red – it may become impossible for some households to meet their monthly living expenses and debt repayment obligations.”

The report shows British Columbians’ disposable income saw the biggest drop in Canada, down from $269 to $734. This puts a lot of pressure on budgets: 46% said they were $200 or less away from meeting all of their financial obligations, while 34% said they already couldn’t cover all of their bills and the payment of their debts. These indicators are respectively up one point and four points.

“Those who have depleted their rainy day savings funds over the past two years may feel compelled to take on more debt to meet the rising costs of their day-to-day expenses,” Paul said in a statement. on the consumption index. “But as interest rates rise, the cost of servicing some of these debts will also rise, making it harder to pay them off. Once they enter this cycle of indebtedness, it can be very difficult to break free.

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It’s not all bleak, however, as British Columbians still have the highest disposable income in the country, even with this steep decline. They are therefore the least likely to say they are concerned about rising interest rates for their own financial situation (53%, down eight points in the quarter); or that they cannot financially support a 1% rise in interest rates (16%, down nine points).

They are also the least likely to be worried about their current debt (36%, down from six) and to regret the amount of debt they have (40%, down from seven).

“Although it has fallen significantly, British Columbians still have higher disposable income than most provinces, which could explain why they feel less concerned about their future finances,” Paul said.

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But a year of rising costs and rising interest rates could spell financial trouble for some, Paul warned.

“My advice to anyone struggling is don’t be too hard on yourself and remember we’ve all been through a lot in the last two years including a financially devastating pandemic and job loss. that stems from that,” Paul said. “Be sure to seek advice from a debt professional immediately.”

The data has been compiled by Ipsos on behalf of MNP Ltd. from March 9 to March 15, 2022, based on a survey of 2,000 Canadians aged 18 and older, and are believed to be accurate within plus or minus 2.5 percentage points, 19 times out of 20.

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Leslie M. Gill