Canadians worried about their financial situation

Canadians are going through a precarious time when it comes to personal finances, according to a recent survey by Chartered Professional Accountants of Canada. Inflation, rising interest rates and the recent peaks in the real estate market are worrying many. Overview.

Delphine Belzile
The Press

Mortgage

“An impressive chunk” of 60% of adults with a mortgage believe they can afford to pay it back only after age 65, the CPA Canada survey found. The figure is “worrying,” says David-Alexandre Brassard, chief economist at CPA Canada. The dream of debt-free retirement is becoming increasingly unlikely in the future, he says. As real estate market prices are high and the required down payment is substantial, people are delaying the purchase of a property, explains the specialist. Rising interest rates are also increasing the burden of mortgage debt. It then becomes more difficult to repay “too high” mortgages before retirement, he notes.

Debt

The CPA Canada survey reveals that almost half of Canadians consider themselves to be in debt. Debt is a concern for 68% of the population, and 61% of Canadians who have borrowed in the past two years for day-to-day expenses still have outstanding loans, according to the survey. Increases in the key rate and inflation are harming the economic recovery of Canadian households, underlines Lorenzo Tessier-Moreau, senior economist at Desjardins. Debt is essentially linked to mortgage debt, which has increased over the past two years, he said. Households had the opportunity to repay their consumer credit during the pandemic, but there has been a drop in savings and an increase in credit since the “return to normal”, indicates the economist.

Saving

Savings are a concern for 47% of Canadians, according to CPA Canada. What is most worrying, according to David-Alexandre Brassard, is that a third of the population does not save money. That said, the country’s savings rate has not reached a critical state, according to the two economists consulted by The Pressbut it is more important than ever to have good financial habits to prevent risks and money-related stress, explains David-Alexandre Brassard.

Emergency fund

The CPA Canada survey indicates that 54% of the population say they have an emergency fund. In September 2021, 79% of Canadians said they have $2,000 in case of an emergency, according to the Canadian Payroll Association. Currently, CPA Canada estimates that less than one in two people have the capacity to save $2,500 in case of the unexpected, while 38% of the population could not obtain $1,000 without a loan.

Financial situation

Already last April, 65% of Canadians cited money as a stressor, when interest rates and inflation were just starting to rise, according to the CPA Canada survey. Some 27% of respondents feel that their financial situation has deteriorated over the past year. Lorenzo Tessier-Moreau is not surprised: the level of debt has increased since 2021. In addition to mortgage debt, current monetary policies are putting pressure on savings, according to him.