'Simply no way for me to cut back anymore': Canadians reveal how BoC's interest rate hike affects them

Since the Bank of Canada announced the biggest interest rate hike in decades aimed at tempering rising inflation, Canadians have been assessing the impact on their purchase decisions and financial futures.

This week, CTVNews.ca asked Canadians what impact the unexpectedly large rate hike will have on their lives.

While some are left axing plans for home improvements and decreasing grocery budgets, others, who are hoping to enter the housing market, see the hike as a “positive” opportunity amid falling housing prices.

TROUBLE FOR HOMEOWNERS:

Catherine Sarginson, from Victoria, B.C., wrote in an email to CTVNews.ca about the troubles she is now facing as a homeowner. “The cost of gas and groceries is already killing me. The interest rates on my mortgage line of credit has hiked my payments by over $80 before this latest hike. I have to renew my mortgage next year and I don't know what I am going to do. I have already cut out cable, sold my TV set, cancelled the newspapers and magazines. I haven't been to a movie in three years. I haven't bought any new clothes in over four years. There is simply no way for me to cut back anymore.”

Kevan Spice, another homeowner from Alberta, emailed to say that the interest rate increase is driving him to a financial “breaking point.”

“I have a job in the housing construction industry and my work has almost (come) to a stand-still due to people’s fears of unfeasible interest on their mortgage and an inability to absorb the increased costs,” he wrote. “The cost of my daily living has gone up beyond the point I can afford to pay with my current financial situation. Primarily, all my money is being allotted to necessities and not extra loans outside of my mortgage.”

Another Canadian homeowner, Tjreddy Pierrefonds, who did not disclose a location, wrote that costs towards vacations, home improvements and entertainment expenses now need to be cut to offset the increase in payment.

Jason Peters, from Stanhope, P.E.I., is a homeowner who is married with four adult children. "We also house an elderly disabled parent and look after our granddaughter quite frequently," he wrote in an email. "Our next mortgage renewal will be in four years.  We had be on schedule to have our mortgage paid off in 11 years, but we don’t think that will be possible anymore and will push back any retirement plans. We’re trying to prepare for hard times and want to be able to help our adult kids." He added that there will be no entertainment budget or vacations in the near future. "We consider ourselves lucky that we have the ability to adjust and adapt to these changes," he wrote.

Another man, from Spruce Grove, Alta., purchased a home in February of this year. "Our broker gave us the worst case scenario over the last 20 years and warned us the rates will likely be on the rise, but we could never have foreseen what the rates have jumped to," he wrote in an email. "Our payments started at $738 bi-weekly, we are told they will jump to over $1,000 bi-weekly. Basically $550 dollars more per month in less than half a year. We have cancelled life insurance policies, cancelled travel plans (after no travel for the last two years) and will be selling our car in order to afford our mortgage. My wife and I have average wages and we purchased our home for $440k. Our bank offered to lock us in at a fixed rate, but we would have to refinance our mortgage at almost 5 per cent."Many Canadians, however, also see opportunity in the central bank’s big rate hike.

'POSITIVE' IMPACTS:

James Stockton, from Waterloo, Ont., wrote that the drastic interest rate hikes are having only a “positive impact” for him. "I'm not a homeowner and my business does not own our space, and [until now] there's been no hope of that ever changing."

Garry Miles, from Riverview N.B., wrote that he expects a major correction to home prices to “seriously hurt some but allow others to take advantage of falling house prices.”

“Personally, I am retired with no debt,” he wrote. “So the increased rates payable on GICs is very welcome as they have minimal risk and I must convert my small RRSP to a RIF next year.”

Ross Reynolds, who did not disclose a location, also emailed CTVNews.ca, writing that the increase will have “zero effect" on him.

“I have no debt what so ever,” he wrote.

He added that “those with a mortgage, and those that paid thousands and thousands over asking price are in trouble for sure.”

Editor’s note: Responses have been edited for grammar and clarity.