'In over their head': Looming interest rate hike has debt-burdened Canadian homeowners nervous, survey finds

Nearly half of Canadian homeowners — and six in 10 Albertans — are concerned about the impact that rising interest rates could have on their finances, a new survey suggests.

More than 70% of Canadians doubt their ability to cope with a 1% interest rate increase

About 48 per cent of Canadian homeowners and 61 per cent of Albertans are concerned about the impact rising interest rates will have on their finances, according to an Ipsos poll commissioned by the insolvency trustee firm of MNP Ltd. (David J. Phillip/Associated Press)

Nearly half of Canadian homeowners — and six in 10 Albertans — are concerned about the impact that rising interest rates could have on their finances, a new survey suggests.

About 48 per cent of Canadian homeowners are concerned about the impact rising interest rates will have on their finances, according to an Ipsos poll commissioned by the insolvency trustee firm of MNP Ltd. 

​In Alberta, that figure rises to 61 per cent.

The Bank of Canada is widely expected to increase interest rates on Wednesday.

Nationally, more than a quarter of Canadian homeowners — 27 per cent — agreed with the statement that they are "in over their head" with their current mortgage payments, the survey suggests.

Three in 10 Albertans (31 per cent) feel that way, the survey suggests.

The survey also found widespread fear of an imminent plunge in home values.

Nearly four out of 10 homeowners in Alberta said they would be faced with financial problems if their home value goes down — the highest proportion among the provinces, the poll found.

It's not just homeowners getting nervous, MNP Ltd. said in a release.

More than 70 per cent of Canadians rated their ability to cope with a one per cent interest rate increase as "less than optimal."

And 77 would have difficulty absorbing an additional $130 per month in interest payments on debt.

When asked about their personal debt situations, a majority of Canadians said they are pessimistic.

Six in 10 rated their debt situation as less than good, while 15 per cent rated their situation as bad. 

The poll found that 44 per cent of Canadian are within $200 per month of financial insolvency, and half are $300 per month away from the brink.

"Canadians should be bracing themselves for some major financial changes ahead and seek professional help to create a realistic plan to deal with their debt," says Grant Bazian, president of MNP Ltd.

"Many are borrowing against their homes and using them to finance lifestyles they simply can't afford. What's worse is that many are not making regular payments against the principal, and the threat of an increase in interest rates might make it even harder to make ends meet."

Many Canadians on brink of insolvency 

Women are much more likely than men — 48 per cent versus 39 per cent — to be within $200 of insolvency at month-end.

Atlantic Canadians are the most likely to describe their personal debt position as "bad" — the highest in the country at 22 per cent.

The online poll was conducted between June 19 and June 21 with a sample of 2,002 Canadians aged 18 and older. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within plus or minus 2.5 percentage points, 19 times out of 20, had all Canadian adults been polled.  

The survey is a self-assessment for each respondent, not necessarily the full picture of debt and financial status of Canadians.