B.C.’s home owners, on average, have the highest average net worth throughout Canada at more than $1.1 million, but they are also the ones who bear the greatest interest costs brought about by rate growth.
This, in a report released by Environics Analytics last week. The study noted that B.C. households each forked out an extra $1,152 in interest payments last year, fully twice the Canadian average.
“The overarching story this year is that Canadians have never been richer but, at the same time, they’ve never felt poorer,” Environics Analytics senior vice-president of research and development Peter Miron told CBC News.
“Real estate’s way up, liquid assets are up decently, their pensions are up, everything on their balance sheet looks great but, all of a sudden, when you look at these rising interest rates, that's going to start pinching their cash flow and is going to leave them with less money left over at the end of the year.”
Read more: Vancouver home price growth not the fastest nationwide
These developments also accompanied an 8.5% growth in B.C.’s average household debt in 2017, more than double the national average of 4.5%.
“The effect of the interest rate increases in 2017 works out to be an extra mortgage payment per household no matter where they live. It just happens that in Vancouver, households are already carrying much more significant levels of mortgages,” Miron stated.
On a national scale, net worth grew by 8.5% last year, up to an average nearly $808,000. However, Miron said that much of the increase was sealed into assets like real estate.
Meanwhile, national average household debt rose by 4.5% while the average interest-expense-to-income ratio shot up to 6.4%, marking the first increase in a decade.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate