Rising interest rates are already costing some Canadians the equivalent of an extra mortgage payment — and the burden on household discretionary spending will only continue to grow, says a new report by Toronto-based research firm Environics Analytics.
According to the WealthScapes 2018 report, average Canadian net worth rose by 8.5% to $807,872 in 2017, due in large part to a nationwide jump in real estate values of 9.9%.
At the same time, Canadian’s average interest-expense-to-income ratio rose for the first time in a decade, with the average household spending $544 more on interest charges in 2017, and the average Vancouver household (where mortgage debt is up 8.9%) spending approximately $1,152 more in interest charges.
“For many Canadians the rising interest rates over the past year have already cost them the equivalent of an extra mortgage payment,” Peter Miron, Environics Analytics’s senior vice president, research and development, said in a statement. “As interest rates have steadily increased since late 2017 we expect the strain on household finances will be greater this year.”
All together, Canadians paid $9 billion more in interest charges in 2017 than in 2016.