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Last updated on March 4th, 2024

Manulife survey: Can Canadians afford their homes?

A recent survey released by the bank of Manulife revealed that almost fifty percent of Canadian homeowners do not have enough money put aside to pay for bills if an emergency occurs. They also found that many would no longer be able to afford their houses if the mortgage rates go up and their payments increase as a result and a third of Millennials believe that current interest rates are too high, despite the fact that Canada is currently experiencing some of the all time lowest interest rates.

Manulife did the study on three different groups of Canadians – Baby Boomers, Generation X and Millennials. For those of us that are not familiar with the terms, Baby Boomers are people born in the years following World War II, when there was a temporary marked increase in the birth rate and includes people who are currently between the ages of 52 and 70. Generation X is the generation born after that of the Baby Boomers and Millennials refers to people born between the late 70’s until the year of 2000. The bank found that Millennial homeowners have the lowest levels of emergency funds among the surveyed groups. About quarter of homeowners from each generation were either not sure how money they have or had less than a thousand dollars in a bank, while only one third of all responders reported having over five thousand set aside for a rainy day.
38 percent of people who were homeowners already have a hard time affording their mortgage and bill payments while over thirty percent claim they would not be able to pay bills if the main earner in their family loses their wage. Generation X, people between the ages of 35 and 51 claimed that not being able to save enough money for their retirement was their biggest source of stress. Baby Boomers mostly said that their main goal was to keep living in their homes throughout retirement, but twenty five per cent were hoping that their home equity would make up over sixty per cent of their household wealth when they retire.

As a reaction to this survey Rick Lunny, president and CEO of Manulife claimed that it surely can be very stressful for people to live paycheque-to-paycheque. “If you don’t have extra cash at the end of the month, it’s very difficult to build a rainy-day account.” For those who are not being able to put any money aside, he strongly suggests working with a financial advisor to create a budget and set some goals, as a start. According to Lunny, people are often surprised to find out just how much of their paycheque goes to things that are unnecessary.
The bank of Manulife recommends homeowners to save enough to cover at least three to six months of living expenses in case there is an emergency or a sudden major expenditure. “A financial buffer is an important part of a financial plan,” said Lunny. For starters, a high-interest savings account can yield great results and help put aside some money. Reducing debt by using your savings could also be a good idea to save interest if you have a home equity line of credit, which can be a great help in case of an unexpected and sudden emergency.

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