Most Canadians with debt would be significantly impacted if interest were to rise two percentage points, finds BMO’s annual debt report. Sixty-four per cent 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.
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.”
This article originally appeared on advisor.ca.