A new poll indicates more than half of us in this country think rising interest rates will negatively impact their personal finances, but the same survey suggests only about a quarter of that number have an emergency fund to deal with any potential hardship
The survey of 1,350 voting-age adults by Forum Research Inc. was conducted after the Bank of Canada raised its benchmark overnight rate from 0.75% to 1% on Sept. 6, the second increase in three months.
After an unprecedented nine years of ultra-low interest rates, it’s clear consumers are starting to fret the party is over. Anyone with variable-rate mortgages might well be petrified that interest rates could again reach the high teens, as they did in the early 1980s.
Respondents said they were also concerned more rate hikes are on their way. Some 12% of those surveyed said they expect the impact of higher rates to be extremely negative, a six-percentage-point increase from a similar poll conducted in August.
Even so, 17% believe rate hikes will have some positive aspects: debt-free seniors would welcome higher returns on GICs and fixed-income investments, but another 38% don’t think it will have an effect either way.
Forum officials are more concerned that 26% of respondents have no emergency savings, and 40% have a cushion of a month or less.
Financial planners generally recommend three to six months as a hedge against job loss or other setbacks. A minority do: 14% have two to three months, 9% have four to five months, and 13% have six months to a year. Only 15% have a year or more and predictably, 56% of the latter group are age 55 or older.
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