Up to a million Canadians would struggle to cope with a 1 per cent rise in interest rates with 700,000 at risk from even a 0.25 per cent rise.
A study by TransUnion shows that most Canadians are well-placed to deal with increases but high levels of debt mean that for some even a $50 increase in monthly expenses could be a tipping point.
“Despite rising debt loads for Canadians, our study found that the far majority of consumers will be able to manage an interest rate hike of up to one percent,” said Jason Wang, TransUnion’s director of research and industry analysis in Canada. “Our assessment, though, identified a subset of the population of nearly one million borrowers who may face financial challenges when rates rise.”
The study found that there are 26 million Canadians with credit, averaging 3.7 products each and the study focused on products which are most affected by interest rate changes.
Those who may struggle with a 0.25 per cent rise in rates represents 15 per cent of the population with a mortgage, line of credit, or both. A 0.5 per cent rise could see 30 per cent begin to struggle while a 1 per cent rise could be a problem for 40 per cent.