Nearly nine tenths share affordability concerns and seven tenths worried about making mortgage payments, finds poll
While Canada’s central bank has made significant progress in subduing headline inflation from its multi-decade high peak, its rate-hiking effort has also exacted a heavy financial toll on Canadian households, according to a new survey by Manulife Bank.
Among the Canadians who participated in the poll between October 5 and 11, 86% were concerned about the direction of the Canadian economy. A similar 84% majority think Canada’s already in a recession or heading into recession within the next year, with nearly three quarters (73%) of respondents sharing the latter view.
Nearly 90% of respondents to the poll were concerned about how affordable life in Canada is, with 71% saying they’re not able to afford necessities like food and housing. Another 70% are worried about their overall financial health and wellness.
"We've been in a period of economic volatility for a number of months and that it is not likely to change any time soon," Alex Lucas, president, Manulife Bank said in a statement.
Seventy per cent of the 2,001 Canadians in Manulife Bank’s survey shared worries about making their mortgage payments. Among those who have to renew their mortgage in the next 12 months, 85%, meanwhile, are dreading the day.
"Despite slowing inflation, our data indicates that close to two-thirds of Canadian households still need to renew their mortgages at higher rates which will undoubtedly put a lot more pressure – and stress – on household finances," Lucas said.
Interest rates, particularly the prospect of further increases, were also a point of concern. Of the homeowners with mortgages polled, one in three (32%) anticipate having to sell their homes in case interest rates rise further. Fewer than two fifths of respondents (37%) feel they’d be able to withstand the impact should the Bank of Canada embark on more rate hikes.
Canadian borrowers have arguably borne the brunt of the central bank’s aggressive anti-inflation campaign, which saw interest rates increase by nearly fivefold.
Against a backdrop of soaring household debt, one in two (49%) indebted Canadians feel uncomfortable with the amount of debt they’re carrying. Four fifths (79%) were consumed by worries about their ability to pay back their debts, representing a 14-percentage-point increase over the previous year.
The survey also found 71% of respondents didn’t have a financial plan, echoing findings from a raft of other similar polls conducted this year.
Having a financial plan in place makes households more able to withstand economic challenges, according to the Financial Resilience Institute. According to research conducted by the FRI, households working with a financial planner are more financially resilient compared to those who don’t.
