In a new report released earlier this week, Environics Analytics warned that while B.C.’s home owners hold the highest average net worth nationwide (at more than $1.1 million), they also bear the greatest burdens posed by interest rate growth.
B.C. household paid an extra $1,152 in interest last year. This was double the overall Canadian average.
This also accompanied B.C.’s debt growth of 8.5% in 2017, more than twice 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,” Environics Analytics senior vice-president of research and development Peter Miron told CBC News.
Read more: B.C. markets take the lead in national home price growth
On average, national net worth increased by 8.5% last year, up to nearly $808,000. However, Miron said that much of the gains were locked into assets such as real estate.
At the same time, 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.
“The overarching story this year is that Canadians have never been richer but, at the same time, they’ve never felt poorer,” Miron stated.
“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.”