Many Canadians are fighting to make ends meet as the cost of housing increases, according to the results of a Manulife survey released May 24.
More than a third of all homeowners—37%—across the country have had trouble paying their bills in the past year as a direct result of soaring housing costs, saying they have been “caught short” of funds to pay their monthly expenses.
Manulife found that since fall 2015, the average mortgage debt load has increased from $175,000 to $181,000. In Vancouver, the average mortgage debt was $259,000, which was the highest in the country, followed by $217,000 in Calgary and Edmonton and $194,000 in Toronto.
High home costs have also made it difficult to save for retirement, many respondents said. Only four in ten of those surveyed said they feel confident they will have enough saved up by retirement age, even though they expect to have significant home equity built up by that time. The study found 26% of those polled expect this equity to make up more than 80% of their total net worth at retirement.
“Our research has consistently found that becoming debt-free is among the top financial priorities for Canadian homeowners,” said Manulife Bank of Canada president and CEO Rick Lunny.
“They also must find a balance between debt repayment and saving for retirement so they don’t end up house-rich and asset poor.”
Having insufficient savings by retirement could lead to homeowners retiring later than they had planned and having to downgrade their standard of living, Manulife said. Other options include downsizing their homes and borrowing against home equity.
A vast majority—94%—of Canadian homeowners say they want to remain in their homes after retirement. However, fewer than two-thirds expect to have their mortgages paid off by that time.
@EmmaHampelBIV
Check out BIV’s podcast for the week of May 17, 2016: