This seventh increase in the key rate by the Bank of Canada, which rose by 50 percentage points to reach 4.25% on Wednesday, is hurting the wallets of Quebec households, and those in Estrie are not spared.
With the successive increases in the key rate, Valérie Laliberté had to review her budget, a reality shared by many other families. Mother of a blended family of four children, the Sherbrooke resident has seen her mortgage payment double over the past year.
“During the refinancing, we opted at that time for a variable rate. […] It was something that we saw as positive. It was something we were able to do. We don’t have a mortgage that exceeds our means, but the fact remains that with the constant increases, for a year, it’s starting to hurt the wallet, ”explained the lady.
Some budget items being entrenched, such as rent or car loans, some are forced to cut elsewhere, such as in leisure, monthly subscriptions, clothing or even groceries. In Valérie’s case, she had to put some projects on hold.
“My partner and I will be together for 10 years next year. We thought we would take a trip, so we put that on ice. […] Our house needed work. However, that did not materialize,” she added.
For other families, the pressure may become too much. In Estrie, 278 insolvency files were recorded this year from July to September, compared to 231 for the same period last year, according to the Office of the Superintendent of Bankruptcy, which represents an increase of nearly 20%.
According to the licensed insolvency trustee, Pierre Fortin, of the office Jean Fortin et Associés, the rapidity between the successive increases in interest rates makes the task difficult for Quebec households, which have little time to adapt.
“The price of a pint of milk, we have no control over that. But we can control, reduce and eliminate our consumer credit debt. This is what will, in many cases that we treat, give oxygen in particular to pay for the house. […] The first thing we will look at is to make the budget with the person to see where the money they earn goes, ”reported the president.
And it’s not just consumers who suffer. Businesses and manufacturers must also deal with the rise in interest rates, while coping with a possible drop in demand.
“It is sure that it has an impact. Traders want to sell a little more, but consumption will necessarily decrease. Consumers must make choices. […] It will have an impact on [commerces] who thought they were having a great holiday season. There may be strategic choices on the part of consumers,” said the president of the Chamber of Commerce and Industry of Sherbrooke, Sébastien Lussier.