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Thursday, February 22nd, 2024

CICA Debt Poll

CICA Determined to Become Expert in Personal Finance

A study was recently commissioned by the Canadian Institute of Chartered Accountants (CICA)  to learn what Canadians do on a day-to-day basis to manage their finances. The study also wanted to  understand how much confidence Canadians have in particular financial activities.  The purpose was to determine how the CICA  could help Canadians make better financial decisions and increase their knowledge of finance in general.

The CICA wants chartered accountants to become the “go to” people for personal finance,  in the same way that a trusted mortgage broker in Vancouver is the “go to” person when individuals in British Columbia want to purchase a home.

Specifically, the objectives of the research were to:

–  Determine how to motivate Canadians to increase their skills in making financial decisions

–  Determine the specific questions that Canadians have related to finance as well as  personal financial management

–  Determine the best way to motivate Canadians to find answers to these questions

–  Determine the needs of schools and parents in educating children on topics relating to financial literacy

According to the CICA,  48% of those polled in the survey felt that a “significant rate hike”  would likely make it difficult for them to continue making payments on their mortgage or debt.  This is something that a trusted mortgage broker in Vancouver would take into account when determining what mortgages a clients can qualify for.

And while 48% would be concerned in the event of a “significant rate hike”, 29% would also find it difficult to make payments in the event of a 0% to 2% rate increase.

3.5% is the average increase that would create a financial challenge for the individuals surveyed.  Such a surge in rates is possible, but most would deem it highly unlikely during the coming 5 years.  Such a hike would move rates above long-term averages and have a negative effect on the country’s leveraged economy.

It’s important to note that not all of those polled were holders of mortgages. Only 42.7% had debt  related to their homes,  says the Canadian Association of Accredited Mortgage Professionals (CAAMP).

So how do most people determine their tolerance for rate increases? Most people have no idea (off the top of their head) how a rate increase of 1% would affect their mortgage payment.  Calculators to determine the effect of such changes are available online. You could also find the answer by contacting a trusted mortgage broker in Vancouver.

Regardless of what the media would have you believe about the number of individuals who are vulnerable in the event of rate spikes, the danger is much more limited than what the media suggests.

Secondly, it’s important to note that being “challenged” by a higher rate is not the same thing as being unable to make payments. Most people become very resourceful when looking into the face of a foreclosure.

The study also discovered that women are more concerned about a rate increase than men. For this reason, it’s also more common for women to choose fixed rates.

A trusted mortgage broker in Vancouver can assist you if you are unsure what type of mortgage is right for you, or what affect a rate hike would have on your payments.

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