Despite the efforts, many Canadians are making to dig themselves out of debt, roughly a quarter say their situation remains “overwhelming.”

Worse yet, more than half (53%) are living paycheque to paycheque, according to the BDO Canada Affordability Index.

The survey does a deep dive into people’s debt loads. Some insights:

  • 4 in 10 Canadians have non-mortgage debt totalling $20,000 or more.
  • Among the 75% of gen-Xers with debt:
    • 1 in 4 (23%) have between $20,000 and $40,000 in non-mortgage debt
    • 59% carry a credit card balance and 55% have a mortgage (vs 38% of millennials and boomers/seniors).

Meanwhile, the percentage of Canadians with debt rose across all credit categories compared to last year’s figures:

  • 45% have mortgage debt (up 5%)
    • This seems to imply 1.85 million more people got a mortgage in 2019, which is high given only about 13 million people have a mortgage
  • 57% have credit card debt (up 4%)
  • 40% have car loan(s) (up 8%)
  • 32% have line(s) of credit (up 4%)
  • 18% have a Home Equity Line of credit (up 6%)

Mortgages remain the biggest debt for most people. Those especially vulnerable to rising levels of debt include women, gen-Xers (those between the ages of 35 and 54), families and Canadians with lower incomes (less than $50,000), the survey found.

Homeownership Still a Priority

High debt levels coupled with rising costs of living and overpriced housing markets are keeping an increasing number of non-homeowners out of the market.

Nearly three-quarters of non-owners (72%) are unlikely to purchase a home in the near future due to the above reasons, the BDO survey found.

Nearly half (47%) of all millennials listed buying a home as their top financial challenge.

A third (35%) of millennials and 37% of gen-Xers said mortgage costs are a financial challenge.

Homeownership Outlook Not All Doom and Gloom

Despite the challenges, many Canadians are achieving homeownership. For families with children, a full 70% are homeowners. That’s up 7% compared to 2018, according to the survey results.

But it requires sacrifices along the way. The number of those delaying paying off their mortgage is up 6% this year to 19%, while those postponing paying off their credit cards rose 7% to 39%.

“When families cannot afford a home down payment or struggle to make the mortgage payment each month, it affects the whole financial outlook of a household,” noted Doug Jones, President of BDO Canada Limited. “There is often a give-and-take between immediate and long-term priorities.”

That’s a problem on many levels, not the least of which are lost opportunities for equity appreciation and forced savings, both of which homeownership provides.

RATESDOTCA Team

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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