BoC rate hike represents a huge strain on consumers
Rate hikes hurt consumers the most, analysts say
Ephraim Vecina
other
Homeowners are at risk of further rate increases down the line
The latest Bank of Canada rate hike represents a huge strain on consumers, financial industry players have warned.
“Another 75 bps sucks significant discretionary income from the pockets of floating-rate borrowers,” analyst Robert McLister told the Financial Post. “It also boosts the minimum mortgage stress test rate, which will dim housing sentiment further.”
James Laird, co-CEO of Ratehub.ca and president of CanWise, said that homeowners should brace for further increases down the line.
“Fixed-rate mortgage holders should budget for today’s higher rates when their next renewal comes up,” Laird said.
Read more: Bank of Canada “not done” on rate hikes: CIBC’s Tal
Christopher Alexander, president of RE/MAX Canada, said that much of the consumer’s burden is during the qualification process.
“Asking people to qualify at 7% now is going to negatively affect more people than even the government, I would think, wants to,” Alexander said. “I’m all for responsible lending practices – that’s what got us through the financial crisis in 2008 – but the stress test is just putting too many people at a disadvantage considering how high interest rates are today.”
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