Survey shows a rise in Canadians fearing loan defaults and bankruptcy
The percentage of Canadians concerned about defaulting on a mortgage or major loan payment rose to 18 percent in February, up from 16 percent in January, according to a survey conducted by Maru Public Opinion and reported by BNN Bloomberg.
This survey, a long-standing measure of financial outlooks, also found that 11 percent of respondents were likely to declare bankruptcy in the next two months, a slight increase from the previous month, while another 3 percent stated it was “very likely” they would declare bankruptcy, maintaining January's figure.
The survey's findings echo the recent data from the Office of the Superintendent of Bankruptcy, which reported a 17.9 percent month-over-month increase in consumer bankruptcies in January and an 18 percent rise from the previous year.
Additionally, consumer proposals, which allow for the renegotiation of terms, saw a 19.7 percent increase from December and a 25 percent jump from January of the previous year.
The rise in defaults and bankruptcies signifies the deepening financial difficulties Canadians face amidst higher interest rates and living costs post-pandemic.
“A lot of people are feeling massive pressure,” noted John Wright, executive vice-president of Maru Public Opinion. Initially, in July 2020, when Maru began this poll, 10 percent of respondents felt at risk of defaulting, a number that decreased to 8 percent by May 2022.
The February survey highlights that younger Canadians aged 18 to 34 now represent 40 percent of those at risk of defaulting, with those earning less than $50,000 annually making up 26 percent, a 6-percentage point increase from January.
Ontario reported the highest proportion of individuals at risk of default, at 22 percent, up by 4 percentage points.
Despite these financial challenges, the survey indicates some optimism among Canadians regarding the economy's direction, with 36 percent believing the economy is on the right track, up from 33 percent at the start of the year.
This sentiment, however, remains considerably lower than the 57 percent optimism recorded in July 2021. According to Wright, “This has been a relatively slow, and steadily paced and uninterrupted, upward curve in positivity regarding the direction of the Canadian economy over the last four months.”
The Maru Household Outlook Index, reflecting Canadians' views on the economy and their personal financial situation, edged up to 87 in February from January, yet still denotes a predominantly negative sentiment.
The index, which considers scores below 100 as indicating negative sentiment and above 100 as optimism, has remained in negative territory since December 2021, hitting its lowest at 83 in March 2023. “We’re swimming with negative and desperate times,” Wright commented.
Maru conducted this survey from March 1 to 4, polling a random selection of 1,532 Canadian adults, revealing the ongoing financial concerns and a cautious streak of optimism among the populace.
