Interest rates

Credit counselors are busier than inflation, interest rates are taking their toll

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Credit counselors say they are seeing an increase in the number of people in financial difficulty following the Bank of Canada’s recent decision to raise its key rate by 75 basis points to 3.25%

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“We are noticing that people are more stressed about their money due to interest rate increases,” said Stacy Yanchuk Oleksy, CEO of Credit Counseling Canada.

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“As far as what people can do, they can look at their own situation and see if interest rate hikes affect them directly. If they do, they may want to contact a nonprofit credit counselor to review their situation and discuss options.

Bruce Sellery, CEO of Credit Canada Debt Solutions, said he has also noticed an increase in people concerned about debt.

“We are seeing a significant increase in the number of people calling us for advice. The rate hikes, combined with rising inflation, have made it much harder for many families to make ends meet,” Sellery said.

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Some in difficulty have recently taken advantage of low-interest loans.

“Certainly some people have taken out larger mortgages than they are currently able to pay. It’s clear. At the same time, the cost of living has gone up in almost every other area, and wages haven’t kept pace,” Sellery said.

“If you’re feeling stressed about your debt or feeling like you’re falling behind, call a nonprofit credit counselor. We’ll answer your questions, outline your options, and listen to your concerns with compassion.

Sellery added that it comes down to cash flow and people need to increase their income and reduce their expenses to ensure they are living within their means.

“The situation will become even more difficult for people. While the job market is great right now, there are growing concerns about a coming recession,” Sellery said.

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“The higher rates will also persist, and those who are able to grind now may not be able to in a year or two.”

The Bank of Canada says global inflation is high and measures of core inflation are rising in most countries.

“The Canadian economy continues to operate with excess demand and labor markets remain tight. Canada’s GDP rose 3.3% in the second quarter. Although this was a little weaker than expected by the Bank, domestic demand indicators were very strong – consumption grew by around 9.5% and business investment rose by almost 12%,” the Bank of Canada said in a statement.

“With higher mortgage rates, the housing market is shrinking as expected, after unsustainable growth during the pandemic. The Bank continues to expect the economy to slow in the second half of this year as global demand weakens and tighter monetary policy here in Canada begins to bring demand more in line with supply.

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