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Environics Analytics has completed a study that shows rising interest rates paired with a jump in household debt, is putting strain on homeowners’ finances. According to the research group, Canadians are really starting to feel the weight of the burden.

Metro Vancouver, the host to an average $1,152 in interest charges per household last year, is bearing the biggest brunt of increased rates, more than doubling the nation’s average, shows the WealthScapes 2018 report. Canadians saw additional interest charges of $544 from the previous year, equating to a total of $9 billion more in interest charges from one year to the next.

One Mortgage Payment Too Many?

Peter Miron, the author of WealthScapes 2018 and the senior V.P. of research and development at Environics Analytics, explains that Canadians are paying as much as an extra mortgage payment due to the rate hike. While the net worth of the average Canadian household shot up by 8.5 per cent to $807,872 at the end of last year, the report displays a sizable portion of that wealth being tied up in illiquid assets such as real estate.

The Rise of the Millionaire Neighbourhood

With British Columbia’s average net worth of households at $1.102 million, this marks the first time an entire province has passed the $1 million thresholds. Ontario is close, at $972,774 average household net worth.

Throughout Canada, approximately 20 per cent of neighbourhoods have an average household net worth exceeding $1 million. British Columbia plays host to the majority of these millionaire neighbourhoods, because of the shockingly expensive real estate prices. Well over a third of B.C. households are located in these wealthy neighbourhoods.

Are Homeowners Up to the Challenge?

With household debt growing too fast for the average Canadian income, disposable incomes will take a drastic hit. So, while important bills and groceries will be taken care of, expect less extravagant spending from Canadian consumers.

It should be noted, however, that the 2017 jump in average household debt of 4.5% is less drastic than in previous years, perhaps adding some breathing room for Canadians.

Interestingly enough, data from Canada Mortgage and Housing Corporations indicates that although housing prices and interest rates keep climbing, default mortgage rates in Metro Vancouver have shown vast signs of improvement. It could be surmised that while Canadians will have to tighten their belts, they’re more than equipped to handle these financial challenges.