Nearly 60% of Canadians have changed their behaviour by doing things such as cutting back on spending on both extras and essentials to brace themselves for rising interest rates, a new survey from Manulife Bank suggests.
Among those who have taken steps to prepare for higher rates, 27% pared back on entertainment such as movies and bars, 17% put more money into savings accounts, and 10% spent less on essential items, such as groceries, the poll data showed.
It’s a good sign that some Canadians are being more prudent as interest rates continue to inch higher, said Rick Lunny, president and chief executive of Manulife Bank.
“It is encouraging that there is a large group of people preparing for higher interest rates… Young families, not surprisingly, had the most concern about debt. So if you are in a position where you can adjust your lifestyle, I think that’s a good thing.”
The online survey of 2,003 Canadians was conducted between May 11 and 14, after the Bank of Canada had raised interest rates three times since last summer, but before the central bank’s latest hike in July to 1.5%.
Two-thirds of respondents to the Manulife Bank survey said they are concerned about rising interest rates, and 23% said they were spending more on interest payments than they did last year.
And while some respondents said they were watching their spending more closely, half of respondents in debt said they are stressed about the level of indebtedness and one in three are kept awake at night worrying over it, the survey showed.
What’s more, 40% said the level of indebtedness has a negative impact on their mental health and 30% said debt is causing issues in their personal relationships, the poll suggests.
Twenty per cent of respondents said their spouse or common-law partners do not know how much debt they are in, and 12% of people with debt hid a large purchase from their significant others.
“In some ways, it’s similar to the stigma over mental health, where people are embarrassed, not comfortable or they’re feeling guilty about their situations,” said Lunny. “So they don’t want to share that knowledge … when you’re concerned or embarrassed, you do hide things from your loved ones.”
The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.