Average household debt in B.C. up 26 per cent

Two-point rate hike would stress 71 per cent of B.C. households in debt: BMO report

Money could get tighter for many people carrying debt if interest rates begin to rise.

High levels of debt mean many B.C. households may be under serious financial pressure once a long-expected climb in interest rates finally begins.

British Columbians had an average of $99,834 in household debt in 2014, according to a new survey by Pollara conducted for BMO’s annual debt report.

That’s up more than 26 per cent from $79,089 in 2013.

According to the report, 58 per cent of B.C. households carry credit card debt despite the high interest rates they charge. That’s well above the national average of 52 per cent. It found 44 per cent in B.C. have mortgages and 10 per cent have student loans.

Seventy-one per cent of B.C. respondents with household debt said they would be stressed if interest rates rose two points – significantly more than the national average of 64 per cent or 59 per cent of Albertans who said a two-point hike would be stressful.

“The sizable number of indebted households that would feel very strained by a relatively moderate increase in interest rates is concerning,” BMO senior economist Sal Guatieri said.

“This is a worrisome side effect of a prolonged period of low interest rates and needs to be closely monitored, especially if rates continue to fall.”

Guatieri said the rising household debt levels may be partly explained in some areas by rapidly rising home prices that spur buyers to take on larger mortgages.

Bank officials say an eventual rise in rates to normal levels is inevitable and families should stress-test their ability to withstand the increase and manage their finances in a higher rate environment.

A typical Surrey house now selling for $689,000 requires mortgage payments of $2,840 a month, assuming a 2.7 per cent rate, 10 per cent down payment and 25-year amortization. A two-point rise to 4.7 per cent would take that payment up to $3,500.

Too many people in the Lower Mainland in particular are buying homes at prices that leave them barely able to cover the mortgage and associated household costs, said Gary Tymoschuk, vice-president of operations for the Credit Counselling Society.

“Then you throw on an extra credit card or two and it makes it very tight in terms of managing all the debt,” he said.

The society is already called on to help significant numbers of people in financial trouble but it expects the need to increase when rates climb.

“A lot of British Columbians are living pretty close to that wire in terms of our overall indebtedness versus what we can afford to pay,” Tymoschuk said. “The smallest little tick up in the interest rate could certainly negatively affect a lot of people and put a lot of stress on their household budgets.”

Just Posted

Surrey councillor calls proposed policing transition plan ‘shocking’

Councillor Linda Annis says taxpayers deserve to see the report they paid for

Surrey Veterans Village groundbreaking ‘monumental’

$312-million project to house Canada’s first ‘centre of excellence’ for PTSD and mental health

Surrey policing plan sent to provincial government for review

‘I urge our residents to come out and help us shape their Surrey Police Department,’ Surrey mayor says

Bald eagle event planned for South Surrey

Participants will search for eagles in Kwomais Point Park

Kelowna toddler suffers cracked skull after fall from balcony

Neighbour who found the two-year-old boy said he has a bump the size of a golf ball on his head

Unbe-leaf-able: Agassiz man finds more than 200 four-leaf clovers in a month

Walt Hardinge has found more than 219 four-or-more leaf clovers this spring alone

Mother bear, three cubs relocated from Maple Ridge

Silver Valley residents calling for ‘no-kill’ zone.

VIDEO: TransLink to roll out battery-powered bus pilot this summer

Four buses will run a 2.5 year pilot along Marine Drive

Crews fight fire with fire to keep blaze from northern Alberta town

The wildfire now covers some 920 square kilometres

Man in B.C. charged with murder and arson in 2016 New Brunswick death

He is charged in the death of 71-year-old Lucille Maltais, who was found inside a burned down home

North Delta happenings: week of May 23

Events and community listings for North Delta

Public warned after man exposes himself to girl, 13, in North Vancouver

RCMP say incident may be linked to others that happened last year

Improve your life and theirs, adopt a cat from the BC SPCA

The BC SPCA holds an adult cat adoption promotion

Most Read