Higher rates a problem for many: survey

Canadians who are worried about the amount of interest they pay for borrowing money could be relieved to hear the central bank decided Tuesday to keep its benchmark rate at a relatively low level of one per cent until at least the fall. But a recent survey, which found a significant interest rate hike would pose a challenge to nearly half of those polled, highlights the need for better financial literacy.

TORONTO — Canadians who are worried about the amount of interest they pay for borrowing money could be relieved to hear the central bank decided Tuesday to keep its benchmark rate at a relatively low level of one per cent until at least the fall.

But a recent survey, which found a significant interest rate hike would pose a challenge to nearly half of those polled, highlights the need for better financial literacy.

“Canadians need to take control of their financial situations,” said Nicholas Cheung of the Canadian Institute of Chartered Accountants, which sponsored the poll.

“They need to make decisions in their own best interests, and by taking this control they will be stronger financially.”

Of the 1,000 Canadians randomly sampled by Harris Decima via telephone, 48 per cent of them said a significant interest rake hike would make it difficult for them to keep up with mortgage or debt payments.

Of that group, 29 per cent said they would have difficulty making payments if rates went up by two percentage points.

An additional 29 per cent of those worried about interest rate hikes said an increase of three or four percentage points would pose a problem.

The study came out as the Bank of Canada announced Tuesday that it will keep its key interest rates low at least until the next policy meeting in September.

The central bank — an independent arm of the government — generally sets the tone for what commercial lenders charge their customers.