A University of Calgary economics professor says decades-high interest rates have disproportionate affects on different demographics, with younger Canadians hurt the most.

Trevor Tombe, professor and research fellow at the university’s School of Public Policy, told BNN Bloomberg that in higher interest rate environments, younger people tend to struggle while many older people thrive.

“There's clear winners and losers here,” he said in a television interview on Friday.

“When rates change, it's a pretty large redistribution, if you will, from younger to older households that's taking place.”

Tombe referenced the latest data from Statistics Canada that show interest payments have gone up about $300 per month for people under 35 compared to last year. Meanwhile, many older Canadians with savings have seen their incomes rise, he noted.

“Higher interest rates also mean higher income for those with savings,” Tombe explained. “That’s up nearly $400 per month for those over the age of 65.”


In recent years, many governments have made it a priority to ensure that older Canadians are more financially secure, Tombe said, making them more resilient during time of economic uncertainty.

“There's been a lot of policies that have really tilted the scales in favour of older individuals,” Tombe said.

“The only group of households in Canada who are saving more now per month are those over the age of 65, everyone else is saving less because prices are rising more than incomes.”

Older Canadians also vote in larger numbers than younger ones do, Tombe said. This may be another reason why government policies have often been made with them in mind, he said, though he argued that the economic security of young Canadians should also be a priority.

“As interest rates strain government finances, some potentially difficult fiscal decisions might be ahead,” he said.

“We need to take care to ensure that young people are not the ones that are unfairly saddled with the heaviest burdens while older Canadians are spared.”

Tombe said he believes older Canadians should still be able to benefit from the income gained as interest on their savings, but added that the policies governments enact going forward shouldn’t “exacerbate this windfall to older Canadians.”

“We need to make sensible fiscal choices here recognizing which are the groups of Canadians that are having the most difficult time right now,” he said.