Yahoo Finance Fewer Canadians are unable to cope with interest rates versus a year ago: Yahoo/Maru poll
Fewer Canadians say they’re struggling financially with current interest rates versus a year ago, according to a new Yahoo Canada/Maru Public Opinion poll. That’s good news after the Bank of Canada’s decision on Wednesday to leave its benchmark rate at a 22-year high.
One-quarter of overall respondents now report they are “not coping well” with higher interest rates, down from 33 per cent last year. Many more Canadians than last year at this time say higher interest rates have not really had an impact on them at all (43 per cent, versus 29 per cent last year.) That is despite interest rates rising in that time.
Governor Tiff Macklem says the Bank’s trend-setting overnight lending rate needs “a bit more time” at five per cent in order to “do its work” to wear down inflation.
“When we have more assurance that we're on that path, we can start discussing lowering interest rates,” he said at a press conference in Ottawa on Wednesday. “We're not there yet.”
The post-COVID rise in borrowing costs has been hard to stomach for Canadian consumers and businesses. That strain may be easing, according to the poll of more than 3,000 Canadians between Jan. 19 and 22.
What if interest rates rise again?
Wednesday’s rate decision removed previous language stating policymakers are prepared to increase rates if needed. However, Macklem noted the risk of another rate hike is not zero.
“While more Canadians may be handling the impact of higher interest rates on their lives better than was the case a year ago, more mortgaged homeowners say they may be forced to sell if rates rise,” said Maru executive vice-president John Wright. “Part of that is likely due to the pause on rates since last July that has allowed most to adjust to the new higher-rate realities.”
If the Bank’s policy rate were to rise a quarter basis point to 5.25 per cent, 62 per cent of homeowners with mortgages believe they could “ride it out for as long as it takes,” down from 65 per cent.
Of that group, 38 per cent say they’d have to sell or vacate their home within an average of 9.4 months and find another living arrangement. That’s up from 35 per cent last year.
What Canadians think the Bank of Canada should do
Of all Canadians surveyed 35 per cent believe the central bank should reverse its course and lower interest rates, because current levels are causing way more harm than good. However, that view is more widely held by those with mortgages, at 46 per cent.
Fifteen per cent of respondents believe the Bank of Canada should keep raising rates until it reaches an inflation target of two per cent. Half of all respondents believe the Bank should pause for at least a few months to assess the economy.
Maru Public Opinion surveyed 3,026 adults between Jan. 19 and 22. Within this group, 1,858 Canadians who own their home were interviewed, with an estimated margin of error of +/- 1.8 per cent for the general public, and 2.3 per cent for homeowners, 19 times out of 20.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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