Interest Rates Are Near Historic Lows
Younger Canadian homeowners don't realize how good they have got it, according to the most recent consumer debt survey. The mistaken perception that current interest rates are the norm or even high may be setting them up for future financial difficulties and suggests their optimism for how soon they will be debt free is misplaced.
When asked how today's interest rates compared to historical norms, more than one in three Canadians aged 30-39 incorrectly responded that today's rates were about average or relatively high. At the same time,more than half of this group expects to be debt-free by the time they are 50 while fewer than one in five respondents aged 50-59 actually report being debt-free.
These younger homeowners may be taking on more debt than they will be able to afford if interest rates rise. While there is no expectation we'll see rates like those of the 1980s, a rise of even a few percentage points could have a significant financial impact on this younger generation of Canadians.