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A CPA Canada survey found that an “impressive portion” of 60% of adults who have a mortgage believe they can’t pay it off until after age 65. That number is “disturbing,” says David Alexander Brassard, chief economist at CPA Canada. He says the dream of debt-free retirement is becoming increasingly unattainable in the future. Because the real estate market prices are high and the down payment required is large, people are delaying the purchase of real estate, the specialist explains. Higher interest rates also increase the burden of mortgage debt. Then it becomes difficult to pay off “too high” mortgages before retirement, he notes.
The CPA Canada study revealed that nearly half of Canadians consider themselves in debt. Debt is a concern for 68% of the population, and 61% of Canadians who have borrowed in the past two years to make ends meet still have outstanding loans, according to the survey. Increases in the headline rate and inflation are hurting the economic recovery of Canadian families, confirms Lorenzo Tessier Moreau, chief economist at Desjardins. He said the debt is mainly related to the mortgage debt, which has increased over the past two years. Families have had the opportunity to pay off their consumer loans during the pandemic, but there has been a decline in savings and an increase in credit since the “return to normal,” the economist notes.
Savings are a concern for 47% of Canadians, according to CPA Canada. Even more worrying, according to David Alexander Brassard, is that a third of the population does not save money. However, the country’s savings rate has not reached a critical state, according to two economists consulted. JournalismIt is more important than ever to have good financial habits to prevent risks and financial stress, explains David Alexander Brassard.
The CPA Canada survey indicates that 54% of residents say they have an emergency fund. In September 2021, 79% of Canadians said they had $2,000 on hand in the event of an emergency, according to the Canadian Payroll Association. Currently, CPA Canada estimates that less than one in two people has the ability to save $2,500 in the event of the unexpected, while 38% of the population cannot get $1,000 without a loan.
Last April, 65% of Canadians cited money as a stressor, when interest rates and inflation started rising, according to a CPA Canada survey. About 27% of respondents feel that their financial situation has deteriorated over the past year. Lorenzo Tessier Moreau is not surprised: the level of debt has risen since 2021. In addition to mortgage debt, current monetary policies are putting pressure on savings, he says.
- current policy rate
Source: Bank of Canada
- Inflation was measured according to the consumer price index for the month of June 2022
Source: Bank of Canada
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