Canadians worry about their financial situation

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

Posted at 8:00 am

Delphine Belzile

Delphine Belzile
The press

mortgage

“An impressive 60% proportion” of adults with a mortgage believe they can afford to wait until they are 65 to pay them off, according to the CPA Canada survey. The number is “worrying,” says David-Alexandre Brassard, chief economist at CPA Canada. The dream of a debt-free retirement will become increasingly unlikely in the future, he says. Due to the high real estate market prices and the high down payment required, the purchase of a property is delayed, the expert explains. Rising interest rates also increase the burden of mortgage debt. Then it becomes more difficult to pay off “too high” mortgages before retirement, he notes.

debts

CPA Canada’s poll shows nearly half of Canadians feel they are in debt. Debt is a problem for 68% of the population, and 61% of Canadians who have borrowed for everyday expenses in the past two years have outstanding loans, according to the survey. Increases in interest rates and inflation are hurting the economic recovery of Canadian households, said Lorenzo Tessier-Moreau, senior economist at Desjardins. Debt is essentially related to mortgage debt, which has increased over the past two years, he said. Households have had the opportunity to repay their consumer loans during the pandemic, but since the “return to normal” savings have fallen and credit has risen, the economist says.

Save on computer

According to CPA Canada, savings are a concern for 47% of Canadians. Most worrying, according to David-Alexandre Brassard, is that a third of the population does not save money. However, according to the two economists consulted, the country’s savings rate has not reached a critical state The pressbut it’s more important than ever to have good financial habits to avoid risk and money-related stress, explains David-Alexandre Brassard.

emergency fund

The CPA Canada survey shows that 54% of the population say they have an emergency fund. According to the Canadian Payroll Association, as of September 2021, 79% of Canadians say they have $2,000 on hand in case of an emergency. Currently, CPA Canada estimates that less than 1 in 2 people are able to save $2,500 for the unexpected, while 38% of the population would not be able to get $1,000 without credit.

Financial position

According to CPA Canada’s survey, as early as April last year, 65% of Canadians cited money as a stressor when interest rates and inflation were just beginning to rise. About 27% of respondents feel that their financial situation has deteriorated over the past year. Lorenzo Tessier-Moreau is not surprised: the debt level has increased since 2021. In addition to mortgage debt, current monetary policy is putting pressure on savings, he says.

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  • 2.5%
    Current prime rate

    SOURCE: Bank of Canada

    8.1%
    Inflation measured by headline CPI for the month of June 2022

    SOURCE: Bank of Canada

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