Many Canadian homeowners, particularly Millennials not prepared for unexpected expenses or interruption of income : Manulife Bank
The latest Manulife Bank Homeowner Debt Survey has uncovered the truth: Many Canadian homeowners, particularly Millennials, lack the financial flexibility to adjust to rising interest rates, unforeseen expenses or interruption in their income.
- 25% of Millennials have no emergency savings
- One in four homeowners were “caught short” at least once in the past year, with insufficient money on hand to manage daily expenses
- Almost half of Millennials received help from family members with their first home purchase
Mortgage debt increased by 11 per cent to $201,000 last year and more than half (52 per cent) of Canadian mortgage holders lack the financial flexibility to quickly adjust to unexpected costs, per a new Manulife Bank of Canada survey. This despite 78 per cent of Canadians having made debt freedom a top priority. The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation.
Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed. “The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income,” says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. “However, building flexibility into how they structure their debt can help ease the burden.”
Overall, nearly one quarter (24 per cent) of Canadian homeowners reported they have been caught short in paying bills in the last 12 months. The survey also revealed that 70 per cent of mortgage holders are not able to manage a ten per cent increase in their payments. Half (51 per cent) have $5,000 or less set aside to deal with a financial emergency while one fifth have nothing.
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