The Globe and Mail’s article “Higher Mortgage Rates Would Hit Households Hard: BMO” is centered around a survey conducted recently by the Bank of Montreal. The survey suggests that nearly seventy five percent of Canadian households would be under financial pressure if mortgage rates were to increase “modestly.” This places a the Bank of Canada governor in a tricky situation. Low interest rates are said to be the cause of the nation’s high debt levels, but increasing the rates could diminish economic growth.

This is an extremely troubling situation for Canadians. Low rates have allowed many homeowners to get into the market but just barely. Jim Flaherty, Finance Minister, tightened the rules around mortgage this past summer in this Vancouver Sun article. This restricts the market, but it keeps consumers out of debt. Nearly all those surveyed said debt was a major issue for Canada. If low rates are the cause for debt, then rates should be raised, right? But with sixteen percent of homeowners saying they would be on the brink of being unable to afford their homes if rates were raised, this poses a huge ethical dilema. Raise rates to keep potential consumers out of debt or keep rates low to help existing debt carriers manage their finances?