Forty percent of Canadians who have debt don’t think they’ll escape their debt, ever. That’s according to a survey by financial service company Manulife, released Friday.
The poll paints a picture of the debt trap that more and more people are finding themselves in. Manulife surveyed more than 2,000 people across Canada who have an annual household income of $40,000.
“There is a financial wellness crisis, and it’s affecting Canadians of all demographics,” said Rick Lunny, CEO of Manulife said.
It may affect everyone, but it suggests that baby boomers are in better financial shape than Gen X and millennials, surprise surprise. Sixty percent of boomers said they are richer than their parents were at the same age. Less than half of younger cohorts felt that way.
It isn’t all terrible though. Millennials report struggling financially, but they were more likely (14 percent) to say that their income is rising faster than their spending is (compared with 10 percent for people aged 41 to 69). That’s not something we hear often.
This survey comes as experts sound the alarm about the amount of debt that people in this country are carrying. This week, Canada’s central bank again warned that household debt is a major point of weakness. It’s described as something that has started to creep up again and is higher than economists would like to see.
According to credit monitoring service Equifax, the average person’s debt in Canada is $71,979, significantly more than $57,000 which is where it was five years ago. This includes all kinds of debt, including mortgages.
With the recent pick-up in home prices, mortgage debt has grown. The Bank of Canada’s senior deputy governor Carolyn Wilkins expressed worry about the fact that people who are already carrying a lot of debt are piling on more. "The market has been boosted by a drop in mortgage rates. And the share of new mortgages going to highly indebted borrowers has started to creep up," she said.
But household debt, which includes mortgage loans, is a collective Achilles Heel. According to the latest figures from Statistics Canada, Canadians owe $1.77 for every dollar they have to spend.
The other main component in household debt is consumer debt, which is money owed for things such as clothing and electronics as well as student and auto loans. It has climbed to a total of $782.9 billion, from already high levels in recent years. Consumer debt can be one of the most stressful types of debt for those who can’t slay it—imagine a ball and chain following you around for things you’ve bought that only decrease in value over time.
Equifax note that credit card use is on the rise and loans are generally taking longer to pay off. Another trend reported by Equifax is that more than half of Canadians plan to spend less money on holiday gifts than in the past. Many reported anxiety related to their debt.
The credit agency has warned that rising delinquency rates—meaning people going bankrupt, or filing for insolvency—will be the norm this year. Millennials are going bankrupt faster than any other demographic in Canada. Woo, ain’t late capitalism grand?
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