Little angst over interest rates rising

Little angst over interest rates rising

By Derek Abma, Financial Post;
Canwest News Service
April 20, 2010 

Mortgage interest rates may be on the rise, but a new poll shows little worry about this among Canadians holding mortgages.

The Investors Group, in announcing results of its poll released Tuesday, said Canadians "may be overly confident that they can take higher borrowing costs in stride."

Some of the results include 35 per cent of respondents saying they are not worried about their ability to make payments as interest rates rise, and 41 per cent saying it would take rate increases of three percentage points or more to "cause them to lose sleep."

"Individuals aren't as concerned as we might have thought they were," said Peter Veselinovich, the Investors Group's vice-president of banking and mortgage operations. "And that probably differs from the response we would have got a generation ago, where debt was very much seen as that thing you wanted to pay down very quickly."

Veselinovich said Canadians may be confident because they have a financial plan or they have a "blissful lack of knowledge."

This online poll of 1,006 mortgage holders between March 30 and April 9 happened just as Canada's major banks were beginning what would be two separate sets of mortgage-rate hikes over about two weeks that would take benchmark rates for five-year, fixed-rate mortgages up 85 basis points to 6.1 per cent.

More increases are expected to be triggered when the Bank of Canada begins raising its overnight target rate from a record-low 0.25 per cent, set about a year ago to mitigate the effects of the recession.

There is growing speculation the rate could rise as soon as its next announcement on June 1.

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