Most Canadians with debt would be significantly impacted if interest were to rise two percentage points, finds BMO’s annual debt report. Sixty-four percent say their budgets would be strained, while 25% say they would be very financially stressed.
But, there’s optimism among Canadians regarding the pace at which they can pay down their debts, and many (46%) expect to take on more next year.
To date, average household debt in Canada is $92,699, according to the report. That’s trending above the four-year average of $88,303. Still, most people (59%) predict they’ll pay off their current debt in five years or less.
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Because interest rates have hovered around historic lows, many Canadians “have become more comfortable over time with managing their debt,” says Christine Canning, head of Everyday Banking for BMO. “[But] rates will inevitably rise to normal levels, so Canadians [should] stress-test their ability to afford the debt they currently have.”
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