Buyer's remorse? Manulife Bank’s Debt survey reveals close to 1 in 4 homeowners say if interest rates were to increase further, they would be forced to sell their home
The survey takes a closer look at the impact of interest rates, inflation and housing prices on affordability in Canada
Over one in five Canadians expect rising interest rates to have a significantly negative impact on their overall mortgage, debt and financial situation.
As many as eighteen per cent of homeowners believe they can no longer afford the house they own.
Indebted Canadians are more likely to report that debt is causing them stress with close to half saying it is negatively impacting their mental health.
The housing market is out of reach for most – two-thirds do not view home ownership as being affordable, in their local community.
Nearly half of Canadians said they would struggle to handle unexpected expenses or are reconsidering summer vacation plans due to affordability concerns.
June 13, 2022
TORONTO – Home ownership has been viewed as out of reach for many Canadians, for quite some time. In June 2021, Manulife Bank’s Debt Survey revealed seven out of ten Canadians (71%) who do not own a home worry about saving up for one, including as many as two in five who worry a lot about this. In June 2022, the bi-annual Debt Survey reveals with interest rates, inflation and housing prices increasing, many who are already homeowners say if interest rates were to increase further, they would be forced to sell their home.
The affordable housing crisis has been well-documented for some time, and the renewed data from this year’s Debt Survey highlights the impact interest rates, inflation and housing prices continue to have on Canadians’ standard of living and livelihoods.
Among those surveyed, fewer than half feel prepared for rising interest rates (46%), inflation (42%), or housing prices (40%), which underscores how further increases in inflation, interest rates, and/or housing prices could be damaging for many Canadians.
“The survey revealed nearly one third of Canadians admit they don’t understand how inflation or interest rates work, close to three in four do not have a written financial plan and almost half do not have a household budget, and that’s particularly telling when reviewing the results of this season’s Manulife Bank Debt Survey results,” said Lysa Fitzgerald, Vice President of Sales, Manulife Bank. “However, Canadians can gain confidence and control of their financial lives by acquiring a better understanding of the impact interest rates and inflation have on their personal finances, and taking that into account when creating their personal financial plans – whether that’s independently or through the support of a certified financial advisor”.
The survey responses also reveal four in five Canadians think there is an affordability crisis in Canada, a figure which suggests this is a major issue that might become worse if inflation continues its upward trajectory. In addition, over one in five Canadians expect rising interest rates to have a significant impact on their overall financial situation. Around one in five of those who are in debt expect rising interest rates to have a significant impact on their debt situation. And around one in five of those who have a mortgage expect rising interest rates to have a significant impact on their mortgage situation.
“In the past few years, we’ve seen a huge shift in the housing market, and in parallel we’re witnessing interest rates and inflation rising – all contributing to concerns around Canadian home ownership, affordability and Canadians’ mental health,” said Fitzgerald. “As we move forward, it’s imperative Canadians use resources available to them to talk to certified professionals and find ways to try and become more financially flexible and ensure they’re taking a detailed look at their personal financial plans before making major financial decisions.”
Learn more about the Manulife Bank of Canada Debt Survey and ways to manage finances by visiting: www.manulifebank.ca/debtresearch
About the Manulife Bank of Canada Debt Survey
Now in its eleventh year, the Manulife Bank of Canada poll surveyed 2,001 Canadians in all provinces between ages 20 and 69 with household income of more than $40,000. The survey was conducted online by Ipsos between between April 14 and April 20, 2022. National results were weighted by gender, age, region, and education. This survey has a credibility interval of +/- 2.5 per cent 19 times out of 20, of what the results would have been had all Canadian adults between the ages of 20 and 69 been surveyed.
About Manulife Bank
Manulife Bank is one of Canada’s original digital banks. Since our launch in 1993, we’ve been designing efficient, flexible products that fit seamlessly into our customers’ lives to help make their decisions easier and lives better. Today, Manulife Bank has over $27 billion in assets and serves clients across Canada in all provinces and territories.
About Manulife One
Manulife One is an all-in-one readvanceable mortgage and banking product that lets our customers combine their mortgage with their bank accounts, short-term savings, income, and other debts.
With Manulife One, you can:
- Easily increase or decrease mortgage payments
- Access your home equity when you need it
- Reduce your interest costs and become debt-free sooner
Manulife Financial Corporation is a leading international financial services provider that helps people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we provide financial advice and insurance, operating as Manulife across Canada, Asia, and Europe, and primarily as John Hancock in the United States. Through Manulife Investment Management, the global brand for our global wealth and asset management segment, we serve individuals, institutions, and retirement plan members worldwide. At the end of 2021, we had more than 38,000 employees, over 119,000 agents, and thousands of distribution partners, serving over 33 million customers. Our principal operations are in Asiaand Canada, and the United States, where we have served customers for more than 160 years. We trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges and under '945' in Hong Kong. In the previous 12 months we made CAD$32.7 billion in payments to our customers.
Not all offerings are available in all jurisdictions. For additional information, please visit manulife.com.
