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Nearly one in four homeowners say they will have to sell their home if interest rates go up further, according to a new debt survey from Manulife Bank of Canada.

The survey, conducted between April 14 and April 20, also found that 18 per cent of homeowners polled are already at a stage where they can’t afford their homes.

More than one in five Canadians expect rising interest rates to have a “significant negative impact” on their overall mortgage, debt and financial situation, the survey found.

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The Bank of Canada remains on a rate-hike path as it tries to tame inflation, which is now at a 31-year high at 6.8 per cent. On June 1, the central bank increased its key interest rate by half a percentage point to 1.5 per cent.

The Manulife survey also found that two-thirds of Canadians do not view home-ownership as affordable in their local community.

Additionally, close to half of indebted Canadians say debt is affecting their mental health, and almost 50 per cent of Canadians say they would struggle to handle surprise expenses.

The bank surveyed 2,001 Canadians between the ages of 20 and 69 with household income of more than $40,000. The survey was conducted online by Ipsos between April 14-20.

Interest rates and inflation are closely linked, which is why the Bank of Canada has been pushing up its key rate to try and keep inflation to a target of 2%. But it’s a careful balance between controlling inflation and not tipping the economy into a recession.

The Globe and Mail

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