Almost 1 in 4 homeowners will have to sell a home if interest rates rise more, according to a study

Nearly one in four homeowners say they will have to sell their home if interest rates rise further, according to a new debt study by Manulife Bank of Canada.

The survey, conducted between April 14 and April 20, also found that 18 percent of homeowners surveyed are already at a stage where they cannot afford housing.

More than one in five Canadians expect rising interest rates to have a “significant negative impact” on their overall mortgage, debt and financial condition, the study found.

The Bank of Canada continues to raise interest rates as it tries to curb inflation, which is now at a 31-year high of 6.8%. On June 1, the central bank raised its key interest rate by half a percentage point to 1.5%.

Low interest rates during the pandemic caused a surge in demand for real estate, which led to rising house prices.

“Some Canadians have decided to withdraw their mortgages on the basis of what they could be approved for, and may not have received any financial advice to say, ‘I know I can get a mortgage approval at this particular level.’ but what can I really afford? ”said Lisa Fitzgerald, vice president of sales at Manulife.

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Bank of Canada warns homeowners to raise mortgage interest rates

Personal finance columnist Rubina Ahmed-Haq says Bank of Canada is making sure people are prepared for higher mortgage payments in the coming years.

But Fitzgerald says it’s important to remember that the survey is an indication of how Canadians feel about their financial situation, not a reflection of their actual financial risk.

“There is a lot of speculation going on there,” she said. “I would just encourage Canadians to find a really good certified financial advisor who is used to dealing with this type of scenario.”

The Manulife study also found that two-thirds of Canadians do not consider home ownership to be affordable in their local community.

In addition, nearly half of Canadians in debt say debt affects their mental health, and nearly 50 percent of Canadians say they would find it difficult to cope with surprising costs.