Economic volatility continues to stoke these anxieties, new study says
Nearly two out of five Canadian homeowners (39%) are concerned about their finances, with 18% indicating that they are “very concerned” amid the currently volatile economy and global financial environment, according to a new survey conducted by Leger for BNN Bloomberg and RATESDOTCA.
Among these concerned respondents, approximately half said that they purchased their current home within the past two years.
The poll of 1,513 Canadians also found that while 74% could afford up to $200 in increased monthly costs, only 45% said that they are capable of handling $201-$500 in added costs, while 19% said they could afford $501-$1,000.
Inflation continues to weigh on households’ finances, as a mere 10% said that they can save more than 20% of their monthly income, while only 30% are able to save 11%-15%. Just under half (49%) said they can save up to 10% of their monthly income.
Read more: Mortgage market feels the impact of rising rates
As of the end of 2021, the household debt-to-income ratio stood at 186%, according to the Bank of Canada. This was significantly higher than the pre-pandemic level of 181%, and it represents a potential weak spot for Canadians’ long-term financial prospects, Deputy Governor Toni Gravelle recently warned.
“Rising interest rates are designed to slow the economy by making borrowing more expensive. That tends to slow sectors like housing. But this slowing might be amplified this time around because highly indebted households will face high debt-servicing costs and will likely reduce household spending more than they would have otherwise,” Gravelle said.
“Our base-case scenario includes a slowdown in housing activity. But we could see a larger-than-expected slowdown due to higher indebtedness and unsustainably high housing prices.”
