Bank of Montreal's Wealth Institute released a survey showing that one in six Canadians will not be able to pay their monthly mortgage payments should interest rates increase which can add another C$500 into their monthly payments.
According to ca.reuters.com, the survey found out that 16 percent of Canadians wll not be able to afford their homes if its prices will increase any further. Twenty percent said they need to re- evaluate their budget to pay off higher payments while 26 percent said that they will be able to afford the higher rate will leave them concerned about their finances. Only 9 percent said that there's no problem if there would be an increase in their mortgage rates.
Economists advised the central back to gradually increase the rates to give time for the consumers to adjust with the higher rates. Canada's economy strength is coming from their housing market but rising prices and debts might cast fears on the people that their housing market is over- valued and a crash might happen.
According to business.financialpost.com, Chris Buttigieg, senior manager of wealth planning strategy at BMO, said "The ultimate goal of most Canadians should be the elimination of debt, but the first step needs to be getting rid of bad debt, which has the potential to destabilize a household's financial situation. A financial professional can help you avoid having your debt lead to long-term financial instability and work with you to develop a plan to sort out your balance sheet as quickly and efficiently as possible."
In order to boost the economy, the Bank of Canada has lowered interest rates twice this year together with the decrease in the prices of their needs. More consumers are watching out for decrease in interest rates as more people see this as an opportunity to pay off their loans. 35 percent of the respondents of the survey are looking forward to finish paying their mortgage loans sooner.
What can you say about this statistics? Will you be one of those who will find it hard to pay off their mortgage loans if interest rates went up? Sound it in the comments!
