Rising Interest Rates Stir Anxiety Among Over Half of Ontario’s Population
The nation is anxiously awaiting the Bank of Canada’s upcoming interest rate announcement slated for March 2, 2022. The already strained budget of many households in Ontario, further stretched by the inflated living expenses amidst the COVID-19 pandemic, is expected to face a possibly strenuous year ahead.
A Growing Concern About Debt Repayment
An alarming 53% of Ontarians express worry about the impact of increasing interest rates on their financial situation. This concern was reflected in a recent survey conducted by Ipsos.
The survey also revealed that 53% of respondents are more anxious about their debt repayment ability than they used to be. An equally worrying 45% fear they will face financial difficulties if interest rates continue to rise.
The Vulnerable Ones
A significant 34% of Ontarians concede that the escalating interest rates could nudge them towards bankruptcy. The most susceptible individuals include those relying on credit to meet their daily expenses and are unable to repay their debt.
The Affordability Crisis
With the soaring prices of goods and services, Ontarians are finding it increasingly challenging to afford various aspects of their daily lives. The areas experiencing a notable decline in affordability over the past year include food (42%), savings (42%), clothing and other household necessities (37%), transportation (33%), housing (38%), and debt repayment (31%).
An alarming 41% of respondents reported that at least half of these areas have become less affordable. On a positive note, 81% of Ontarians claim they will be more prudent in their spending in light of the rising interest rates.
The Need for Financial Literacy
The lack of financial literacy could influence the findings of the poll. As she points out, many Ontarians lack a comprehensive understanding of how interest rate increases can affect their personal finances.
Predictions and Preparations
With several rate hikes predicted for 2022, about 26% of Ontarians admit they do not have a solid understanding of how interest rates impact their financial status. A slightly lower percentage (18%) express concern about their ability to absorb an interest rate increase of one percentage point.
Seeking Professional Guidance
Those already grappling with financial difficulties or anticipating struggles in a higher rate environment are advised to seek professional guidance. Licensed Insolvency Trustees at Bankruptcy Canada provide a free and confidential assessment of financial situations.
The Role of Licensed Insolvency Trustees
As the only government-regulated debt professionals, Licensed Insolvency Trustees offer a full range of debt-relief options. This includes Consumer Proposals, informal debt settlements, and Bankruptcies. With a customised approach and specialised debt training, they help determine the most suitable debt-relief options for individuals.
Ontarians Begin to Feel the Impact
Nearly half (47%) of Ontarians already report feeling the effects of the interest rate increases. More than a quarter (27%) admit they have only paid the minimum balance on a credit card or personal line of credit. A worrying 12% have taken loans they could not quickly repay while 15% rate their financial situation as ‘poor’.
Conclusion
In the face of rising interest rates, more than half of Ontarians are concerned about their financial future. With the right financial literacy and guidance, however, they can better manage their debts and navigate the upcoming challenges.
