EDITORIAL: A rocky economy ahead – Toronto Sun

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It looks like the good economic times may be coming to an end. After years of having an economy driven in part by access to cheap debt, things are about to get rocky.

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The Bank of Canada has already warned Canadians to expect interest rate hikes that continue for some time. This has major implications for business, and will hit all aspects of the economy — most especially those sectors that utilize debt to fuel operations or expansion.

When it comes to mortgages, this isn’t just going to hit people taking out a new mortgage. The new, higher rates will apply to people renewing their mortgages. That’s millions of Canadians.

A new debt survey from Manulife Bank of Canada reports that almost one in four homeowners say they will have to sell their home if their interest rates go up further. That’s a staggering and worrisome figure.

Let’s hope this phenomenon never in fact plays out. It’s one thing for people who have unfortunately fallen on hard times to default on their mortgage payments or be forced to sell, it’s another thing to have 25% of homeowners feel that they just can’t afford to live in their homes anymore. The ripple effects of this would be felt even for those who do not have a mortgage.

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The Manulife survey also reveals that almost half of indebted Canadians feel that debt is impacting their mental health and a similar percentage say they are struggling to handle increased expenses.

The problem with this is expenses are only expected to go up, which means the mental health challenges may sadly rise as well.

These are serious issues. The cost-of-living is fast becoming the top water cooler issues for Canadians and it’s not going away anytime soon.

A conversation that was first about the rising price of gas and groceries will turn into a lament on a jump in mortgage payments.

Politicians can’t be blind to these problem — and more government will not be the answer. They are going to need to decrease regulations and taxes as a response.