Faced with inflation and rising interest rates, families are rethinking their calculations

She and her husband bought a house in Saint-Jean-sur-Richelieu last July. Both have modest salaries, and if they have moved out of Montreal, their place of business is to have access to property and get housing spacious enough for the whole family.

After 10 years in the housing cooperative, they had some money saved. Enough, they thought, to give them room to manoeuvre.

We had savings, so we chose a variable rate, where one salary pays the mortgage and the other supports us, explains the mother of the family. So we did our calculations.

Except that in a few weeks mortgage payments skyrocketed. The payments went from $980 to $1,209 every two weeks, and inflation kicked in. : on doit s’asseoir et revoir nos calculs.”,”text”:”J’ai dit à mon mari: on doit s’asseoir et revoir nos calculs.”}}”>I told my husband: we need to sit down and check our calculations.

Since then, the couple has been on the hunt for bargains to lower their grocery bill. He also decided to sell his second car.

The family has also cut back on non-essential expenses such as Halloween decorations, weekly restaurant trips or a Christmas vacation at a hotel in Quebec, which is a tradition at our house. However, despite the efforts, the end of the month remains difficult.

« I was very anxious, I met my doctor, I told him about it. I start talking to the kids about finances to explain it to them. I told them, “If we’re going to decorate for Halloween, we’re not going to do it for Christmas.” We start cutting for us, the parents, but also for the children. »

Quote from Jeanine Messanvi
Hélène Hétu, budget advisor at ACEF Rive-Sud.

Hélène Hétu, Budget Advisor of the South Coast Cooperative Family Economy Association

Photo: Vincent Rességuier

Time bomb

Jeanine Messanvi is far from the only one worried about her finances. It has risen quite dramatically since Septembernotes Hélène Hétu, budget advisor at the South Coast Cooperative Association of Family Economics (ACEF).

Since then, his workshops are regularly sold out, whether on a budget 101 meeting, activity eat well cheap or debt resolution information sessions.

In particular, he notices increased demand for small loans of $700 or less and help with unpaid rent, two programs offered by ACEF Rive-Sud.

According to the latest Equifax report, Canadians’ overall consumer debt increased by 8.2% in the second quarter compared to the same period last year.

We are seeing a significant increase in complex debt situationsnotes Mrs. Héta.

Inflation is causing the most damage at the moment, but predicts that rising interest rates are a ticking time bomb.

It predicts that many households will have to renew their mortgages at rates much higher than the original rate in the coming months.

Vigilant banks

For their part, the banks are waiting, even if they do not anticipate a catastrophic situation in the short term. However, Desjardins Group has taken the lead with customers with the most fragile finances.

Contact was made with each of them to find strategies to limit the impacts. Some are offered ad hoc repayment packages rather than every two weeks or every month. Others choose to postpone the maturity of the loan in order to reduce the monthly payments.

Few people are vulnerable to rising interest ratessays chief spokesperson Chantal Corbeil.

According to the Canada Mortgage and Housing Corporation, the rate for conventional mortgages with five-year maturities increased from 3.22% to 6.64% between September 2021 and September 2022.

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