38% of Canadians are confused about what rising interest rates mean for them: TD

Misunderstandings regarding rising interest rates are creating anxiety and stoking uncertainty amongst Canadian homeowners and prospective buyers, a new survey shows.

The TD Real Estate survey found that 26% of Canadians don’t have a good understanding of the impact of rising rates, while 38% are confused about what the hikes mean for them. Nearly 40% don’t know the difference between variable and fixed interest rates.

Thirty-one per cent of respondents believe that interest rates don’t impact them or their mortgage.

Conducted between May 20 and 25, the national survey included responses from 2,000 Canadians aged 18 and older.

“Rising interest rates affect all Canadians, especially those who are looking to become homebuyers in the near future, and those up for renewal,” said Frank Psoras, senior vice president of real estate secured lending at TD.

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Despite the uncertainty brought on by rising interest rates, 58% of current homeowners expect to take some form of action with their property within the next year. Forty-two per cent plan to renovate, while 13% are likely to sell.

The survey found that many prospective buyers are willing to compromise to get into the housing market. Twenty-six per cent said they’d give up on the overall size of a home in order to make a purchase, while 29% said they’d sacrifice outdoor space.

Of those who are hoping to buy a home in the next year, 76% say they are worried about the impact that rising rates will have on what they can afford, while 27% admitted to not knowing or understanding many of the costs associated with buying a home.

“In today’s dynamic market, understanding the impact of rising interest rates is critical to establishing and maintaining financial health, regardless of where you are on your home journey,” Psoras said.

Psoras encouraged current and prospective buyers alike to meet with a mortgage specialist or financial adviser to get a clear picture of what they can afford and make sense of the “complex and evolving” real estate market.