Majority of Canadians say a rate cut unlikely to prompt them to borrow more: CIBC Poll

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Jul 14, 2015, 04:00 ET

Amid speculation about a possible rate cut, most Canadians say it won't change how they manage their current debt

TORONTO, July 14, 2015 /CNW/ - With the possibility that the Bank of Canada will cut interest rates tomorrow, a new poll by CIBC (TSX: CM) (NYSE: CM) taken just days ago finds the vast majority of Canadians (93 per cent) are unlikely to increase their borrowing if rates drop. In fact, one-third of Canadians say they would use a rate cut as an opportunity to accelerate debt repayment, not take on new obligations.

Highlights of the poll include:

93 per cent of Canadians say they are unlikely to borrow more money if interest rates fall

60 per cent say lower rates would have no impact on them
33 per cent say they would use lower rates as an opportunity to accelerate debt repayment

Only 7 per cent of Canadians say they would consider borrowing more money if rates were lowered

"With interest rates historically low, and many Canadians already focused on debt repayment, it's not surprising that a further rate cut won't cause many Canadians to borrow more," says Christina Kramer, Executive Vice President, Retail and Business Banking, CIBC. "For many Canadians, lower interest rates mean they can accelerate debt repayment by increasing monthly payments or making lump sum payments."

While a further drop in interest rates might only prompt 7 per cent of all Canadians to consider borrowing more, 12 per cent of 18 to 34-year olds said they would consider borrowing more money at lower rates.

"Any change in rates shouldn't be an incentive on its own for taking on more debt," says Ms. Kramer. "Borrowing should be part of your overall financial plan, which takes into account what you need to borrow for and having a plan in place to pay it back."

A recent report from CIBC Deputy Chief Economist, Benjamin Tal, said that a Bank of Canada rate cut is unlikely to help boost the economy by increasing spending but would cause the loonie to fall further, potentially making exports more attractive.

KEY POLL FINDINGS

How Canadians would react to an interest rate cut, by region:
(* indicates sample size too low to report individually)

	No impact on me	An opportunity to accelerate debt repayment	Would consider borrowing more
All Canadians	60%	33%	7%
British Columbia	59%	31%	*
Alberta	62%	31%	*
Manitoba & Saskatchewan	48%	47%	*
Ontario	59%	33%	*
Quebec	67%	29%	*
Atlantic Canada	50%	42%	*

How Canadians would react to an interest rate cut, by age:
(* indicates sample size too low to report individually)

	No impact on me	An opportunity to accelerate debt repayment	Would consider borrowing more
All Canadians	60%	33%	7%
18-34	45%	43%	12%
35-54	56%	37%	*
55+	76%	21%	*

From July 6^th to 7^th, 2015, an online survey was conducted among 1,508 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error - which measures sampling variability - is +/- 2.08 per cent, 19 times out of 20. The results have been statistically weighted according to education, age, gender and region (and in Quebec language) Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.

About CIBC
CIBC is a leading Canadian-based global financial institution with nearly 11 million personal banking and business clients. Through our three major business units - Retail and Business Banking, Wealth Management and Wholesale Banking - CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada with offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.

SOURCE CIBC