The number of Canadians who described themselves as "financially stressed" increased by 20% over the past year alone, according to a new poll
Financial stress levels among Canadians have climbed drastically from a year ago, hitting an all-time high in the latest Annual Survey of Working Canadians from the National Payroll Institute.
The number of working Canadians who described themselves as “financially stressed” increased by 20% over the past year alone to reach an overall rate of 37%.
“This continues a trend that began in 2021 after an initial decline in 2020 when pandemic-induced lockdowns forced Canadians to save — which, with the benefit of hindsight, turns out to have actually been the calm before the storm,” the Institute said.
For many Canadians, saving up money has become more difficult than at any point in the past 10 years, with 63% spending all of their net pay to cover their needs, and 30% spending more than their net pay, leading into a vicious cycle of ever-mounting debt.
As much as 66% of financially stressed Canadians are living paycheque to paycheque, while 50% are overwhelmed by their debt.
“With interest rates, inflation and the cost of living all continuing to rise, for many working Canadians navigating these factors have negatively impacted their financial wellness, and they need to take immediate and urgent action to keep from being overcome,” said Peter Tzanetakis, president of the National Payroll Institute.
RBC Economics study shows Canadian spending slowing due to debt pressures. While spending is steady, early signs of weakness coincide with a slight unemployment rate increase.https://t.co/r5amlMW8vO#mortgagenws #mortgageindustry #householddebt #economy
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 11, 2023
Overall household debt continues to soar
Canadian household debt reached a record-breaking $2.34 trillion in Q2 2023, including $1.73 trillion in mortgage debt and $604 billion in non-mortgage debt, according to data from TransUnion.
Elevated costs of living and multi-decade-high interest rates are pushing more and more Canadians to seek greater financial flexibility through credit, TransUnion said.
“The cost of debt has grown even heavier for some Canadian households,” said Matthew Fabian, director of financial services research and consulting at TransUnion Canada. “While some financial pressure has been offset through continued savings growth and strong employment, many Canadian consumers have accessed credit as a means to short-term liquidity.”
On a quarterly basis, the number of Canadian consumers holding an outstanding credit balance grew by 3.3%. The average instalment on a Canadian mortgage increased by 15% annually to $2,071 per month.
