Canadians with mortgages are carrying, on a average, $190,000 in outstanding mortgage debt, an amount that increases in the West. According to the Manulife Bank of Canada Debt Survey released Tuesday, Albertans have the highest average mortgage debt at $242,400, followed by British Columbians at $217,600.
More than a third of homeowners surveyed said they’d “encounter financial difficulty” if their mortgage payment increased by 10 per cent. Another 15 per cent indicated they could not absorb any increase in their payment.
One of the worrying findings of the survey is that a number of homeowners seem unprepared to meet their payments in the event of a job loss. Over 40 per cent of mortgage holders indicated that if the primary income-earner lost their job, it would take no more than three months before they’d have difficulty making their regular mortgage payments.
“This private debt overhang poses a risk to Canadian growth,” said Megan Greene, Chief Economist, Manulife Asset Management in the news release.
Many homeowners are also feeling pressure between paying down their debts and saving for retirement. According to the survey, 70 per cent of respondents said they would direct some of their money to retirement savings when asked what they would do if their debt disappeared tomorrow.
However, there was room for optimism in the report with Greene noting, “It is positive news indeed that Canadians are finally looking to deleverage.”
The report also found that 56 per cent of homeowners surveyed said they reduced their debt in the past year, up from 51 per cent a year ago. About 40 per cent indicated they’d either made extra mortgage payments or increased the amount of their payments in the past year.