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 Community Leader Awards winners revealed

The 16th CLA awards, presented by the Now-Leader, recognized Surrey’s un-sung heroes

COMMUTER ALERT: Serious pedestrian crash closes Pacific Highway

Traffic along 176th Street, 4th to 8th Avenue, is blocked while Mounties continue to investigate.

MPs meet with Surrey council to discuss RCMP, LRT

Federal government to have quarterly meetings with Surrey

Hogg curious if a new recreation centre is needed in Grandview Heights

South Surrey-White Rock MP to host a Town Hall Meeting tonight

Surrey building that has gathered dust for 20 years is for sale again, with bids sought

Potential sale of the long-vacant 104 Avenue Centre is good news, Surrey Board of Trade CEO says

People flocking to Vancouver Island city to see hundreds of sea lions

Each year the combination of Steller and California sea lions take over Cowichan Bay

Humans reshaping evolutionary history of species around the globe: paper

University of British Columbia researcher had the paper published in the Proceedings of the Royal Society

Toronto ‘carding’ activist Desmond Cole stopped by police in Vancouver

Cole says his experience reveals what daily life is like for black and Indigenous residents

Tubing, skating, light display part of new winter festival in Vancouver

Set to open Nov. 23, the six-week festival will take over Vancouver’s Concord Pacific Centre

Commercial trucks banned from left lane of Coquihalla

B.C.’s Ministry of Transportation has introduced a new program that hopes to prevent accidents and closures on the Coquihalla Highway.

B.C. on track to record same number of overdose deaths as last year

128 people died of overdoses in September, bringing the total to more than 1,100 so far in 2018

B.C. firefighters rescue horse stuck in mud

‘It happens more often than you’d think,’ says deputy chief

Regulatory confusion over ‘toxic’ stink near Abbotsford school

Officials sniffing out which regulators responsible for enforcing compliance at neighbouring property

Canadians more prepared for weather disaster than financial one: poll

RBC recommends people check their bank app as often as the weather app

Most Read