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Rising mortgage rates will have a negative impact on household budgets: poll

Mortgage rates are rising in Canada.
Mortgage rates with a variable rate are set to rise as the Bank of Canada raises its benchmark interest rate (Getty) (AlbertPego via Getty Images)

Mortgage rates are rising as the Bank of Canada tries to rein in inflation at levels not seen since 1991, which a new poll suggests could tighten the squeeze on household budgets.

Angus Reid Institute says three in five (58 per cent) Canadians with a mortgage say in a poll that their payments crowd out other portions of their budget.

With rent rising along with home prices, renters find themselves in a similar situation with three-quarters (74 per cent) saying they also have to cut back in other line items.

Inflation is being felt especially at grocery stores and restaurants. Food prices have gone up so much that two-thirds (65 per cent) say meeting the household food budget is becoming difficult.

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Almost all (92 per cent) of the respondents say they have done something to adjust to higher food prices, such as cutting out take-out (72 per cent) or switching to cheaper brands when buying groceries (62 per cent).

Also See: The latest real estate news for housing prices, mortgage rates, markets, luxury properties and more at Yahoo Finance Canada.

"Inflation, the runaway horse the Bank of Canada is trying to wrangle this year, is clearly not doing Canadians any favours. But few homeowners with a mortgage or renters have wiggle room to accommodate increases to the largest line item in their budget as interest rates rise," said Angus Reid Institute in its report.

"Seven in 10 who say their rent or mortgage payments cause them to spend less elsewhere also say there's no room in their monthly budget for an unexpected expense of more than $1,000."

The situation is even tougher for those with kids under 13. Four in five (83 per cent) of renters in this group say rent eats into their budget each month, compared to seven in 10 (71 per cent) for households without children.

Of those that don't consider rent or mortgage payments, half (51 per cent) say they stress about money. Among those who do consider rent or mortgage a problem, nine in 10 stress about money.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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