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Nearly 40 per cent of Canadian homeowners said they are concerned about their finances, and fewer than half said they could afford more than $200 in increased monthly costs, according to the latest survey for BNN Bloomberg and RATESDOTCA.
The survey, which was conducted by Leger, asked 1,513 Canadians about their finances as they face rising interest rates and the highest rate of inflation in more than 30 years. The polling focused on homeowners, with 62 per cent of respondents saying they owned their home. Lager conducted the survey between May 13 and May 15, 2022.
Homeowners, especially those who bought prior to the pandemic, have enjoyed massive equity gains in the past decade. The average price of a home in Canada hit a record $816,720 in February, according to the Canadian Real Estate Association. While prices have declined slightly since then, that is a near doubling of the $468,350 average home price just three years earlier, in February 2019.
The survey found that 39 per cent of Canadian homeowners are concerned about their finances, including 18 per cent who said they are very concerned. Of the concerned respondents, half said they bought their home in the past two years.
Age tended to play a large factor when it came to concern about finances. Those older than 55 were the least likely to be concerned about their finances, with 32 per cent of that group being either concerned or very concerned. Those aged 35-54 were the most concerned, including 23 per cent of this age group saying they are very concerned about their finances, and nearly half the group showing some level of concern (47 per cent).
Those 18-34 fell in the middle of the pack, with 39 per cent showing some concern about their finances.
The survey found that overall, 61 per cent of Canadian homeowners said they are not concerned about their finances at all, suggesting that almost two-in-three Canadians believe they are in good financial shape. There are likely multiple reasons for this. First, unemployment in the country is near a record low following the rebound in the Canadian economy from the 2020 recession caused by COVID-19 lockdowns.
Older Canadians have also benefitted from a rise in home and stock prices in the past two years, likely boosting their confidence as a result.
The survey did find that Canadian homeowners do not have much room for comfort. Seventy-four per cent of those polled said they could comfortably afford up to $200 in increased monthly costs; beyond that, trouble appears.
Only 45 per cent said they could afford $201-$500 in increased monthly costs, while 19 per cent said they could afford $501-$1,000. Nine per cent said they could afford an increase of $1,000 or more in monthly costs.
The survey also found that many Canadian homeowners cannot afford to save more than five per cent of their monthly income. Most experts recommend targeting 10 per cent or more to help save for retirement (it should be noted, however, that each person’s financial needs are different, and the 10 per cent guideline does not apply to everyone).
Seventy-three per cent of Canadian homeowners said they can afford to save up to five per cent of their monthly income, while 49 per cent said they can save up to 10 per cent of their monthly income. Only 30 per cent are able to save 11-15 per cent of their monthly income, while 10 per cent said they have the capacity to save more than 20 per cent.
BNN Bloomberg has teamed up with RATESDOTCA to take the pulse of Canadians every month on key pocketbook issues as we strive to better understand how households are navigating COVID-19. This is the latest instalment in monthly special coverage.