Many Canadians Worried About Rising Mortgage Rates, But Not Budgeting for It: Poll

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By Rhythm Sachdeva

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September 3, 2022 (TVC network) — A new poll has found that more than half of Canadians are worried about being able to pay their mortgage payments as interest rates rise. But many are still not budgeted for them. According to a recent online survey by IG Wealth Management, a financial advisory firm, only 39% of Canadians include mortgages in their monthly budget, despite it being one of their biggest expenses. Surveyed 1,590 adults between July 28 and August 8, she revealed that budgeting is popular among Canadians, with 67% of respondents saying they find budgets useful for managing their monthly cash flow. Budgeted common expenses included groceries (90%), gas (72%), entertainment and savings (54% each). “In many cases, monthly mortgage payments, along with taxes, represent one of the biggest monthly expenses Canadians face,” said Alana Riley, head of mortgages, insurance and banking at IG Wealth Management, in a statement. “So while it’s encouraging that so many people reported having a monthly budget, it only provides a partial snapshot of their overall cash flow situation if they don’t factor in their mortgage.” Mortgages represent 35% of the monthly expenses of the third of Canadians who have them, according to the survey. Many Canadians may not factor mortgages into their budgets because it’s a “fixed cost,” which is unlikely to change every month, said Prentiss Dantzler, assistant professor of sociology. at the University of Toronto, in an email to CTVNews.ca Saturday. “So some households only budget after that payment has already been made based on their disposable or discretionary income amounts after those bills are paid,” he added. Dantzler also points out that households tend to budget for expenditures that they have more control over. “People generally have more leeway in choosing where they get their food and how long they drive rather than using public transport. But they don’t have the same options when it comes to mortgages and rents, as these usually change every year,” he said. In an environment of high inflation rates, with another interest rate hike expected in September, the cost of living has skyrocketed for almost all Canadians. IG’s latest poll found that 60% of all Canadians worry about cutting costs to reduce expenses, while 43% aren’t sure they’ll be able to pay all their monthly bills. Only 45% believe they will no longer have a mortgage when they retire. The survey echoed the findings of another August study, which found that one in four Canadians admitted to taking on debt to cover expenses, listing paying bills and covering living expenses among their main reasons. “Budgets are great ways for families to think about short-term costs and long-term savings goals,” Dantzler said. “However, in times of economic shocks to households, budgets become more advisory than realistic as individuals’ concerns grow about… their long-term living conditions.”

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