Are Canadians Able to Deal With Financial Shifts?
How would you fare if the main breadwinner of your household lost their job? Would you be able to afford your regular mortgage payments during the job search? Do you have an emergency fund? Is it enough?
These are just some of the questions Manulife Bank of Canada (subsidiary of Manulife Financial Corp. (NYSE:MFC, TSE:MFC)) set out to answer in its new survey, with the results coming as less-than-comforting.
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More than a third of respondents said they would have difficulty making regular payments within three months if the breadwinner of their household lost their job. More than 16% said they would struggle with any increase to their current mortgage payment, and that’s even with their employment situation unaltered. (Source: “Canadians ill-equipped to cope with rising mortgage costs: Survey,” BNN, November, 24, 2016.)
When it came to emergency funds, it didn’t get much better. The poll found that 24% of those surveyed don’t know how much is in their emergency fund, while 14% have no funds stored away at all. Nine percent have rainy-day savings of $1000.00 or less.
Things became less bleak from there, with the remainder of those surveyed answering that they had up to $10,000 saved up. The average amounted to $5000. (Source: “Almost half of Canadian homeowners would run into trouble if they lost their jobs, Manulife survey finds,” Financial Post, November 24, 2016.)
“A financial buffer is an important part of a financial plan,” said Rick Lunny, Manulife Bank of Canada’s CEO, in a press release. “A high-interest savings account is a good option. Or, if you’ve got a home equity line of credit, you could use your savings to reduce your debt and save interest — and still have access to that money if an emergency arises.”
Millennials are perhaps the most vulnerable, as the poll has 83% of that generation saddled with mortgage debt. Continuing on with those aged 20 to 34, 36% of the respondents said that mortgage rates are too high, despite lending costs being down at multi-decade lows.
Whatever the case, the situation is not rosy for Canadian mortgage payers and workers.
