Nearly one in six Canadians couldn't handle a $500 mortgage increase
According to the bank, 16% of respondents said they would not be able to afford such an increase, while more than a quarter, or roughly 27%, would need to review their budget.
The ultimate goal of most Canadians should be the elimination of debt, but the first step needs to be getting rid of bad debt, said Chris Buttigieg, senior manager of wealth planning strategy at BMO, which has the potential to destabilize a households financial situation.
Another 26% said they would be concerned, but could probably handle it.
Such an increase would be generated in the case of a three percentage point hike in interest rates - from 2.75% to 5.75% - on a $300,000 mortgage with a 25-year amoritization period.
Given that interest rates are likely to increase in the foreseeable future, the bank said there was no better time to put together a detailed debt management plan.
A report by Statistics Canada last month found the ratio of household credit market debt to disposable income climbed in the second quarter of 2015 to 164.6%, up from 163% in the first three months of the year.
That means Canadians owed nearly $1.65 in consumer credit and mortgage and non-mortgage loans for every dollar of disposable income.
The report by BMOs Wealth Institute found that almost half of Canadians, 47%, believed that the high level of debt in Canada has been influenced by soaring real estate values, while 40% believed it has been influenced by low rates.
Files from The Canadian Press
Employment increased by 35,000 in October
In October, employment rose for youth aged 15 to 24, while it was little changed for the core-aged population of 25- to- 54 year-olds, and for people 55 and older. The largest employment increase was in Quebec, followed by Alberta, Manitoba, Newfoundland and Labrador, and New Brunswick. At the same time, there was a decline in Saskatchewan.
Employment rose in several industries, led by other services; construction; information, culture and recreation; and agriculture. Employment declined in wholesale and retail trade.
The number of private sector employees increased in October, while public sector employment and self-employment were little changed.
Canadian home sales edge up again in October
According to statistics released by The Canadian Real Estate Association (CREA), national home sales posted a modest monthly increase in October but remain below levels recorded one year ago.
Newly introduced mortgage regulations mean that starting January 1st, all home buyers applying for a new mortgage will need to pass a stress test to qualify for mortgage financing, said CREA President Andrew Peck. This will likely influence some home buyers to purchase before the stress test comes into effect, especially in Canadas pricier housing markets. A professional REALTOR is your best source for information and guidance in negotiations to purchase or sell a home during these changing times.
Home sales via Canadian MLS Systems edged up 0.9% in October 2017 on the heels of monthly increases in August and September, but remained almost 11% below the record set in March.
National sales momentum is positive heading toward year-end, said Gregory Klump, CREAs Chief Economist. It remains to be seen whether that momentum can continue once the recently announced stress test takes effect beginning on New Years day. The stress test is designed to curtail growth in mortgage debt. If it works as intended, Canadian economic growth may slow by more than currently expected.