Aug 17, 2022
One-in-four Canadians taking on debt to afford higher costs: report
We’ve only seen the tip of the iceberg for effects of recent rate hikes in Canada: Royce Mendes
Canadians feeling the pressure from rising inflation are taking on additional debt, with one in four stating they’ve had to do this in order to afford higher living costs, according to a report by Finder.
In a survey of 1,013 Canadian consumers, 36 per cent said their top reason to take out a loan this year is to cover bills like mortgage and food. The second biggest reason for a loan was to consolidate existing debt (24 per cent), then to cover bills and living expenses due to job loss (19 per cent.)
“Data shows that wages are not keeping pace with higher living costs and this puts middle-income earners—the bulk of Canadians—in a tough position,” said Romana King, senior finance editor at Finder, in the report.
“It forces many to start prioritizing their expenses and finding ways to make ends meet.”
The survey states Generation Z Canadians are being hit the hardest by higher living costs, with 26 per cent reporting they’re being significantly impacted.
COST OF LIVING CONTINUES TO RISE
The survey comes after Statistics Canada reported inflation rose 7.6 per cent on a year-over-year basis in July, as upward pressure on prices remained broad-based.
The price of Canadians’ grocery bills continued to climb, with the price of food increasing by 9.9 per cent in July.
But groceries aren’t the only thing Canadians are having to dish out more cash for.
The mortgage interest cost index increased 1.7 per cent year-over-year for the first time since September 2020, amid rising interest rates.
Statistics Canada also warned higher mortgage rates could lead to more demand for rental properties, with rent increasing 4.9 per cent in July compared to a year ago.