Canadians' concern over mortgage, loan defaults continues to rise

A recent poll has revealed a growing trend of concerns among Canadians regarding the possibility of defaulting on mortgage or major loan payments, signalling further financial strain as interest rates continue to climb.

According to the survey by Maru Public Opinion, conducted to gauge individuals’ financial outlooks, the percentage of respondents expressing worry about mortgage or loan defaults surged in February. Eighteen percent (18%) said they were likely to default on a mortgage payment or loan payment over the next two months, up two percentage points. Meanwhile, 11% of those surveyed indicated a likelihood of declaring bankruptcy within the next two months, marking a one-percentage-point increase from previous months. An additional 3% expressed a very high likelihood of facing bankruptcy, consistent with figures from January.

These findings parallel data from the Office of the Superintendent of Bankruptcy, which reported a significant uptick in consumer bankruptcies and proposals in January compared to previous months and years, according to the Prince George Post.

“A lot of people are feeling massive pressure,” noted John Wright, executive vice-president of Maru Public Opinion, attributing the pressure to the challenges posed by higher interest rates and escalating living costs post-pandemic.

Mounting financial pressure

The survey also highlighted demographic shifts in financial concerns, with individuals aged 18 to 34 constituting 40% of those apprehensive about defaulting. Moreover, individuals earning less than $50,000 annually saw a notable increase in their representation among those at risk of default, rising by six percentage points since January.

Ontario emerged as the province with the highest proportion of individuals vulnerable to default, experiencing a four-percentage-point increase to reach 22%.

Despite some glimmers of optimism, as reflected in a slight uptick in the percentage of Canadians expressing confidence in the economy’s trajectory, overall sentiments remain subdued. While 36% of respondents now believe the economy is on the right track, this figure falls short of the optimism levels observed in previous years.

The Maru Household Outlook Index, which gauges Canadians’ outlook on both the economy and their personal finances, inched up to 87 points in February, albeit remaining in negative territory. This index, persistently below 100 since December 2021, reflects prevailing pessimism among Canadians regarding economic prospects.

Wright emphasized the gradual but steady increase in positivity regarding the economy over recent months, though cautioning that a return to pre-pandemic optimism levels remains a distant prospect.

“We’re swimming with negative and desperate times,” Wright said.

The survey, conducted from March 1 to 4, canvassed the opinions of 1,532 Canadian adults, offering insights into the evolving financial landscape and the challenges facing households nationwide.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!