A national survey commissioned by the Canadian Institute of Chartered Accountants (CICA) finds that almost half of the respondents (48%) would be challenged to keep up with mortgage or debt payments following a significant rise in interest rates.
Among that group of respondents, 29% would encounter serious problems making payments if rates were to rise two per cent or less. Another 29% believe a rate increase of three to four per cent would be challenging.
The CICA survey, conducted by Harris/Decima Inc., also found that nearly four in 10 of all respondents believe they will still be paying off debt after they turn 65.
“Many Canadians have little room for error when it comes to their finances and that scenario won’t be changing overnight,” said Kevin Dancey, president and CEO, CICA. “This is why the CICA firmly believes that helping Canadians develop financial knowledge is critical to Canada’s ongoing economic strength and prosperity.”
That thought is echoed by James Rajotte, Member of Parliament for Edmonton-Leduc. His Private Member’s Motion to help improve financial literacy in Canada was recently adopted by the House of Commons. “With many Canadians vulnerable to rate hikes or facing long-term debt, it is important that they acquire the knowledge required to make the best financial choices for their circumstances,” stressed Rajotte.
The survey found that groups most worried about rate hikes are women, younger adults and those who lack confidence in their financial skills.
Almost six in 10 surveyed (59%) save less than 10% of their monthly income and, of these, 33% save less than five per cent or nothing at all.
In addition, the research also focused on credit card financing. Forty three per cent of those surveyed reported carrying over a balance on their credit cards, up nine percentage points from a similar study conducted for the CICA in 2010.