Canadians are aware that their debt levels are too high and as a result they plan to spend less on big-ticket items this year, according to a PwC survey.
According to the survey:
- 69% will delay a new car purchase (vs. 64% last year);
- 62% will delay upgrading to a bigger house (vs. 56% last year);
- 61% will delay purchasing new electronics (vs. 59% last year);
- 53% will delay entertainment expenses (vs. 49% last year); and
- 49% will delay a vacation (vs. 47% last year).
John MacKinlay, leader of PwC's national financial services consulting and deals practice, said, "Across the board, we are seeing a new desire by Canadians to cut back on major expenditures from our survey a year ago. Clearly, they are heeding the various warnings from the federal government and the Bank of Canada."
The top reasons cited for wanting to reduce debt were fear of not being able to pay off debt (47%), the economy (46%) and uncertainty in the financial markets (33%).
Tempering this was a measure of optimism from Canadians about their job security and incomes, the report stated. Overall, 76% of respondents felt their jobs were secure, while 21% believed their jobs were "at risk."
"In general terms, Canadians are relatively comfortable with the future of the economy and their job prospects," MacKinlay said. "They are also comfortable with their level of debt because of the equity created by high housing prices, the availability of funds from their banks, and low carrying costs due to the prolonged low interest rates.
"However, as Canada has largely been spared the economic malaise of the U.S. and Europe, many may not fully appreciate the tenuous nature of the global recovery, creating a false sense of security. Continued improvement in the economy will ultimately result in higher interest rates, putting pressure on borrowers."
