Manulife survey paints picture of poor financial flexibility among Canadian homeowners
Canadian Millennials are most at risk from a rise in interest rates, unexpected expenses or loss of income, says a new debt survey conducted by Manulife. But millennials are not alone.
Manulife claims that more than 50 per cent of Canadians homeowners are at financial risk, including one in five who have nothing set aside for a financial emergency. Half of respondents say they have $5000 or less earmarked for an emergency.
Manulife also found that one in four (24 per cent) Canadian homeowners have found themselves unable to pay a bill in the past 12 months. Likewise, 70 per cent of survey respondents said they could not afford a ten per cent increase in their mortgage payments, with Quebecers being most likely to face difficulty.
The survey found that 45 per cent of Millennial homeowners received financial help (loan or gift) from their family to afford their first home. This amount is only slightly higher than the 37 per cent of Generation X respondents who received financial help from family in order to purchase their first home.
Manulife discovered that the bulk (77 per cent) of Boomers plan to stay in their current home when they retire, but that 41 per cent of Boomer respondents had the majority of their wealthy tied up in their principal residence.
To help better manage debt, Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada recommends “building flexibility into how [homeowners] structure their debt.” This allows homeowners to “adjust to rising interest rates, unforeseen expenses or interruption in their income,” says Lunny.
In order to add financial flexibility, Lunny recommends homeowners find the right mortgage for their situation, whether that be one which allows skipped payments, or one which allows for changed payments. In addition, Manulife recommends having access to money to cover three to six months’ worth of expenses.