Manulife Bank homeowner debt survey: Introduction

Nearly 75% of Canadian property owners would certainly have problem paying their home mortgage each month states a Manulife Bank homeowner debt survey. This is the case if their monthly payment boosted by just 10%,

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Manulife Bank homeowner debt survey: The survey

The financial institution surveyed 2,098 home owners. They were between the ages of 20 to 69. They had family incomes of $50,000 or greater. It was an online survey conducted in February 2017.

Since these kinds of surveys typically aren’t randomized, experts claim the internet surveys do not have a margin of error. They state that the study however highlights simply exactly how limited the spending plans are for lots of Canadians.

Manulife Bank homeowner debt survey: The results

Manulife’s study claimed:

14% of participants would not stand up to any type of rise in their regular monthly payments;
38% of those surveyed claimed they might endure a repayment increase of between 1% to 5% before having a problem; and
20% stated they might tolerate an increase of between 6% to 10% before feeling the pinch.

Manulife Bank homeowner debt survey: Almost 75% could not handle a small rate increase

This poll indicates 72% of house owners surveyed could not endure an increase of 10% from their existing record low rates. Let me be clear. We are only talking about a 10% increase; not an increase to 10%. So, if you have a mortgage with a 3% rate of interest, 72% of those surveyed could not make ends meet with an increase in their mortgage interest rate to 3.3%!

That’s an unsafe area to be, with rate of interest readied to increase eventually.

“What these people don’t realize is that we’re at record low-interest rates today,” said Rick Lunny, president and CEO of Manulife.

Manulife Bank homeowner debt survey: Many homeowners have less than $5,000 in savings for an emergency

Overall, almost one-quarter (24%) of Canadian house owners surveyed claimed they have not been able to generate enough funds to pay an unforeseen expense in the past year. And, most are not healthy to weather any kind of economic tornado. About 50% of those questioned had $5,000 or less in reserve to manage an economic emergency. One fifth of them have absolutely nothing saved for a rainy day.

One quarter of millennials questioned had no savings. The same was true for 1 in 6 boomers. 3bestaward

ALSO READ: MANULIFE DEBT SURVEY: ARE YOU PART OF THE MAJORITY OF CANADIANS SCARED ABOUT RETIREMENT?

Manulife Bank homeowner debt survey: If the main income earner lost his/her job, it would take no more than 3 months to be in mortgage default

The study discovered that 45% of millennial house owners– those aged between 20 to 35– would certainly have one of the most problems making their mortgage payments within 3 months, if the main income-earner in their family were to suddenly end up being out of work.

Millennials were additionally the ones that typically had the highest amount of per head home related financial debt, at $223,000. Gen X-ers (those aged 36 to 52) had about $202,000 owing. The boomers (ages 53 to 70) had $180,000.

ALSO READ: AVERAGE HOUSEHOLD DEBT IN CANADA: CANADIANS LOVE TO MAKE IT CONTINUALLY RISE!

Manulife Bank homeowner debt survey: Manulife CEO states millennials not ready for a financial emergency

Lunny claimed many millennials are not ready to manage an economic emergency because of a poor or no financial education and rising debt. They have seen their home loan related financial debt increase greater than any other generation, per the study.

The study revealed a couple of various other distinctions between the generations. Practically half, (45%), of millennial home owners stated they got funding from their family when acquiring their very first residence. This compares to 37% of Generation X’ers and 31% of baby boomers.

Manulife Bank homeowner debt survey: What should you do if you have too much debt?

Could you handle all your debt obligations if on your next mortgage renewal, you had a mortgage rate increase of only 1%? Do you not have any money put away for a financial emergency? Do you worry how you are going to pay your other bills on time?

The Ira Smith Team is here to get you back on track to debt free living Starting Over, Starting Now. We can solve your problems with immediate action and the right plan for moving forward. All it takes is one phone call to book your free, no obligation consultation. Call us now. manulife bank homeowner debt survey 7

Manulife debt survey: Introduction

The Manulife debt survey 2016 published recently shows that the results continue the trend of earlier Manulife surveys. We have written about the Manulife debt survey findings before in some of our blogs including:

Manulife debt survey: Majority of Canadians have no savings

The findings in the current debt survey shows that Canadians are continuing to rely upon debt and not building up any savings to speak of. The highlights from the 2016 Manulife debt survey are:

almost 4 in 10 homeowners were “caught short” at least once in the past 12 months in that they didn’t have enough money in their bank account to cover expenses
6 in 10 homeowners lack confidence that they’ll be able to maintain their lifestyle in retirement
a weaker Canadian dollar had an impact on over half of homeowners’ daily lives. It affected Canadians more on the spending and consumption behaviours than saving, debt repayment and investment activities
1 in 4 homeowners indicated they expect their home equity will make up over 80% of their household wealth at retirement
1 in 4 homeowners in their 50s expect their home equity will make up over 80% of their household wealth at retirement

Manulife debt survey: What does it mean for Canadians?

What this means is that on average:

Canadians’ wealth is composed of their equity in their homes and nothing else
spending habits are such that they have no savings to speak of
if faced with an emergency people couldn’t put their hands on a few thousand dollars of cash quickly
baby boomers have not saved for retirement, other than for the equity in their home;
millennial’s see their fate as the same as the baby boomers
on average, Canadians’ spending habits are such that many times they do not have enough money to live before the next payday
Canadians can barely make ends meet living paycheque to paycheque

Manulife debt survey: 5 simple questions to ask yourself

The dangers are obvious. With everyone’s wealth tied up in the equity in their homes, most Canadians are cash and investment poor. Canadians worry that they won’t be able to live their current lifestyle in retirement. Also, without cash and investment savings, upon retirement, homeowners will have to sell their home to have the necessary cash to live on. Ask yourself the following:

Is all of my wealth tied up in the equity in my home?
Am I living paycheque to paycheque?
Do I barely have enough cash until next payday?
If faced with an emergency, would I have to try to borrow more money because I don’t have a few thousand dollars available?
Do I have too much debt?

Manulife debt survey: Do you have no cash and too much debt?

If you have answered yes to any of these questions, there is help available for you. If you’re like many Canadians who don’t have a plan to deal with debt repayment, you need professional advice. Contact Ira Smith Trustee & Receiver Inc. before your debt load becomes critical. The earlier you begin to deal with it, the more options you’ll have. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Starting Over, Starting Now you can live a debt free life.

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