Economic volatility taking its toll on Canadians, suggests survey

Pessimism is growing over the direction of national economy

Economic volatility taking its toll on Canadians, suggests survey

The volatility and uncertainty that the national economy has experienced in the last 18 months has taken a toll on Canadians, according to a new Financial Health Survey by Manulife Bank.

Around 86% of Canadians expressed their concerns about where the Canadian economy was heading. Most of the respondents (84%) believed that the economy was already in a recession while others (73%) believed that it was heading towards one within the next year.

“Despite slowing inflation, our data indicates that close to two-thirds of Canadian households still need to renew their mortgages at higher rates which will undoubtedly put a lot more pressure – and stress – on household finances,” said Alex Lucas, president at Manulife Bank.

Nearly 90% of respondents said they were worried about the affordability of life in the country, while 70% were concerned about their own financial health and wellness. About 71% expressed doubts over their ability to pay for necessities including food and housing.

Growing unease about mortgage payments was also a prominent factor, with 70% expressing their concerns about meeting their mortgage requirements while 85% were worried about a looming renewal the next 12 months.

About 32% of homeowners with mortgages believe that they could be forced to sell their houses if interest rates continue to increase. Only 37% felt that they could financially handle another increase in interest rates.

Household debt, meanwhile, is notably rising with 49% of indebted Canadians saying that they were not comfortable with their current debt loads. Around 79% were concerned about being able to pay for their debts, a 14-point increase from the findings in the previous year.

“We've been in a period of economic volatility for a number of months and that it is not likely to change any time soon,” said Lucas.

“While the results of our survey are eye-opening, there are often options available to help free up cash flow, pay down debt and help ease some of the stress.”

Lucas suggested that having a financial plan, consolidating debt into a single solution with a lower interest rate, having a rainy day fund or three months’ worth of accessible savings, or speaking to a financial planner or advisor may help Canadians deal with the period of economic uncertainty.