With the possibility that the Bank of Canada will cut interest rates tomorrow, a new poll by CIBC taken just days ago finds the vast majority of Canadians (93 per cent) are unlikely to increase their borrowing if rates drop. In fact, one-third of Canadians say they would use a rate cut as an opportunity to accelerate debt repayment, not take on new obligations.
Highlights of the poll include:
93 per cent of Canadians say they are unlikely to borrow more money if interest rates fall
60 per cent say lower rates would have no impact on them
33 per cent say they would use lower rates as an opportunity to accelerate debt repayment
Only 7 per cent of Canadians say they would consider borrowing more money if rates were lowered
“With interest rates historically low, and many Canadians already focused on debt repayment, it’s not surprising that a further rate cut won’t cause many Canadians to borrow more,” says Christina Kramer, Executive Vice President, Retail and Business Banking, CIBC. “For many Canadians, lower interest rates mean they can accelerate debt repayment by increasing monthly payments or making lump sum payments.”
While a further drop in interest rates might only prompt 7 per cent of all Canadians to consider borrowing more, 12 per cent of 18 to 34-year olds said they would consider borrowing more money at lower rates.
“Any change in rates shouldn’t be an incentive on its own for taking on more debt,” says Ms. Kramer. “Borrowing should be part of your overall financial plan, which takes into account what you need to borrow for and having a plan in place to pay it back.”