Interest Rate Hikes Have Lowered Disposable Income by 3%, Bank of Canada Says

Interest rate hikes have reduced mortgage holders’ average disposable income by about three percent as of 2024, a number that is expected to reach nearly five percent by 2027, according to a recent Bank of Canada report. “Impacts of Interest Rate Hikes on the Consumption of Households With Mortgages” notes that as rates go up, the amount of money that Canadians can spend on non-housing items goes down. The authors noted that by April 2024, monthly mortgage payments had increased by about nine percent since 2022. They are expected to increase by 17 percent by 2027. It all leaves less disposable income in the hands of Canadian homeowners, the authors wrote....