More Canadians are starting to feel the financial pressures of high household debt. TransUnion‘s consumer survey conducted at the end of May, shows more people are worried about making their credit payments. This pressure is causing a significant number of people to delay buying a new home – especially first time buyers.
Two-Thirds of Households Have Concerns About Paying Bills
A significant number of Canadian households are feeling the pinch of high debt. The survey found 67% of households are concerned about covering their bills. The average shortfall in the latest survey was $832.10, down 12% from the previous survey in the beginning of May. This is down 20% from the beginning of April, when people were facing a shortfall of $1,035. These households estimate they have an average of 7 weeks of funds left.
Canadian Households Are Asking Lenders For Debt Relief
Canadians aren’t just worried about debt, they’re reaching out to lenders for help. TransUnion found 42% of respondents have reached out to lenders for strategic options. This is double the number a month ago. About 15% of consumers are already on deferrals or a payment holiday.
Almost A Fifth of Millennials Delay Home Purchases
Canadians are delaying a lot of spending, but home buying is the largest dollar value. The impact from the pandemic has 12% of potential homebuyers delaying their plan. Gen Z is impacted the most, with 21% of people in the age bracket delaying their buy. Millennials follow with 16% shelving their home buying plans. Gen X and Boomers are seeing 8% and 6% respectively, delaying their home purchase. As you might have noticed, younger people are more impacted when it comes to home buying.
Canadian Homebuyers Delaying Purchases
The number of months from peak to trough for the US economy, as determined by NBER.
Source: TransUnion, Better Dwelling.
Households are starting to feel more pressure as the pandemic carries on. A slow business environment combined with high debt levels is making it harder to navigate. This will have a wide impact, from higher arrears rates to delayed home purchases.
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