Study | Financial stress hits less hard in Quebec

The majority of Quebecers do not include their mortgage when making their budget, reveals a study by IG Wealth Management published on Tuesday. They are also less stressed than the rest of Canada about their ability to pay it in a rising rate environment.

Isabelle Dube
The Press

Mortgage payments are among Quebecers’ largest monthly expenses. However, when the time comes to compel yourself to draw up a budget, the mortgage is not one of them. Only 43% of Quebecers include it in their budget, according to the study.

“It surprises us all to see this data,” says Carl Thibeault, CPA and Senior Vice-President for Quebec at IG Wealth Management. “To explain this fact, one of the hypotheses would be that people take taxes and mortgages as obligatory expenses and budget for what is not. »

Respondents said their budget included expenses like groceries (90%), gas (72%), entertainment (54%) and savings (54%).

Another hypothesis, the low rates that had been raging for a good ten years. Here are the posted rates for conventional closed 5-year mortgages listed by Statistics Canada. These are the rates without the discounts granted by the lenders.

“This is what may have influenced people’s behavior, raises Carl Thibeault. A variation of 25 basis points, of 50 basis points, is less significant and we say to ourselves, we will get there one way or another. When we vary with larger data, it becomes significant. »

Ability to make payments

The study also reveals that 56% of Canadian mortgage borrowers fear that they will not be able to make their mortgage payments if interest rates continue to rise. However, this number drops to 35% in Quebec. “What may explain this difference is that Quebec is far from the prices of Toronto and Vancouver,” says Carl Thibeault.

If a $300,000 variable rate mortgage goes from 4% to 6%, the owner will have to pay $350 more per month.

In doing so, 45% of Quebec respondents (60% of Canadians) believe that they will have to reduce their spending due to rising interest rates and inflationary pressures. Some are looking at the next few months with concern: 35% of Quebecers (43% of Canadians) do not know how they will be able to “make ends meet” on a monthly basis.

Only 45% believe they will have paid off their mortgage when they retire. “If you’re retired and you continue to repay a larger mortgage than expected, it can have an impact on the amount left for groceries and discretionary,” concludes Carl Thibeault.

This study was conducted online from July 28 to August 8, 2022 among 1590 Canadian adults.