Pessimism is growing over the direction of national economy
The volatility and uncertainty that the national economy has experienced in the last 18 months has taken a toll on Canadians, according to a new Financial Health Survey by Manulife Bank.
Around 86% of Canadians expressed their concerns about where the Canadian economy was heading. Most of the respondents (84%) believed that the economy was already in a recession while others (73%) believed that it was heading towards one within the next year.
“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,” said Alex Lucas, president at Manulife Bank.
Nearly 90% of respondents said they were worried about the affordability of life in the country, while 70% were concerned about their own financial health and wellness. About 71% expressed doubts over their ability to pay for necessities including food and housing.
Growing unease about mortgage payments was also a prominent factor, with 70% expressing their concerns about meeting their mortgage requirements while 85% were worried about a looming renewal the next 12 months.
About 32% of homeowners with mortgages believe that they could be forced to sell their houses if interest rates continue to increase. Only 37% felt that they could financially handle another increase in interest rates.
Household debt, meanwhile, is notably rising with 49% of indebted Canadians saying that they were not comfortable with their current debt loads. Around 79% were concerned about being able to pay for their debts, a 14-point increase from the findings in the previous year.
“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,” said Lucas.
“While the results of our survey are eye-opening, there are often options available to help free up cash flow, pay down debt and help ease some of the stress.”
Lucas suggested that having a financial plan, consolidating debt into a single solution with a lower interest rate, having a rainy day fund or three months’ worth of accessible savings, or speaking to a financial planner or advisor may help Canadians deal with the period of economic uncertainty.
