- Two in three homeowners expect housing prices to increase in
the next year
- Nearly four in ten homeowners didn't have enough money in
the bank to cover household expenses at least once in the past
year
- Almost 75 per cent feel prepared to deal with an unexpected
household expense, yet average amount in emergency fund is
low
- The average Canadian homeowner has $175,000 in mortgage debt
TSX/NYSE/PSE: MFC
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WATERLOO, ON, Nov. 26, 2015 /PRNewswire/ - More than a third
(38 percent) of Canadian homeowners feel that housing in their area
is unaffordable, according to a new survey released by Manulife
Bank of Canada.
According to the bi-annual survey, 28 per cent of respondents
found their local housing market "somewhat unaffordable", while
another 11 per cent described it as "not affordable at all." Just
over half (51 per cent) called housing in their area "somewhat
affordable" and only one in ten felt housing in their area was
"very affordable."
Perception of affordability varies by region, as homeowners in
Canada's Atlantic provinces are
most likely (83 per cent) to feel housing is affordable, while
those in British Columbia are
least likely (39 per cent).
The survey also revealed that those in Canada's largest urban areas (Vancouver, Calgary, Edmonton, Toronto, and Montreal) are much less likely to describe
their housing market as affordable (46 per cent) than those
elsewhere in Canada (68 per cent).
Perceived lack of housing affordability was most acute in
Vancouver, where just one in three
(33 per cent) indicated housing was affordable.
Housing costs may be putting pressure on other aspects of
homeowners' finances. While almost three quarters (73 per
cent) of homeowners believe they're somewhat or completely prepared
to deal with an unexpected household expense such as a major car
repair or a furnace replacement, other results suggest this may not
be the case. For example, more than one in three homeowners (38 per
cent) were "caught short" at least once in the past year - where
they didn't have enough money in their bank accounts to cover
expenses.
While some of those caught short were able to access a line of
credit (33 per cent) or rainy-day savings (23 per cent), others had
to carry a balance on a high-interest credit card (32 per cent) or
even borrow money from a family member (14 per cent).
"The challenge faced by many Canadians is that their income is
relatively stable from month-to-month, but their expenses can vary
significantly," said Rick Lunny,
President and Chief Executive Officer, Manulife Bank of
Canada. "Access to rainy day
savings or a low-cost line of credit are good options to safeguard
against these fluctuations. However, if your backup plan is to
carry high-interest credit card debt or borrow from a family member
- you could be putting undue stress on your finances or
relationships." The size of many Canadians' rainy-day accounts also
suggests that they may be less prepared than they believe. Fewer
than one in four (24 per cent) homeowners has more than
$5,000 set aside for an emergency,
and half indicate they either have "$1,000 or less", or don't know how much they have
for emergencies.
"While it's always a good idea to have some cash savings
available for emergencies, it doesn't necessarily make sense to
have a large emergency fund if you also have debt," said Lunny. "In
some cases you'd be better off using some of that money to pay down
your debt and have a low-cost line of credit available for larger
unexpected expenses."
While homeowners who work with a financial advisor (56 per cent)
have the same median household income ($85,000) as those who don't (44 per cent), those
with an advisor appear to be in better financial shape on a few
fronts. They're less likely to have increased their debt in
the past year (17 per cent vs. 22 per cent of those with no
advisor), more likely to feel somewhat or very prepared for an
unexpected expense (80 per cent vs. 65 per cent) and have more
"rainy day savings" (median of $4,500
vs. $2,000).
Housing Prices to Increase?
The survey also found that almost two in three (63 per cent)
homeowners expect housing prices in their area to increase next
year while fewer than one in 10 (7 per cent) expects them to
decrease - although this finding varies significantly by
region. In Alberta, Manitoba
and Saskatchewan, almost one in
five (19 per cent) expect prices to decline in the next 12 months,
while just 3 per cent of homeowners in Ontario, 4 percent in British Columbia and 4 per cent in
Quebec expect price declines in
the next year.
Nationally, about seven in 10 (71 per cent) of Canadian
homeowners between ages 20 and 59 have a mortgage, and report an
average of $175,000 of mortgage
debt. Regionally, Alberta
($238,000) and British Columbia ($228,000) reported the highest average mortgage
debt, while Ontario ($167,000), Manitoba/Saskatchewan ($151,000), Atlantic
Canada ($151,000) and
Quebec ($141,000) reported much lower levels of mortgage
debt.
Find out more about your financial wellbeing by taking The
Readiness Quiz.
About the Manulife Bank of Canada Homeowner Debt
Survey
The Manulife Bank of Canada
poll surveyed 2,372 Canadian homeowners in all provinces between
ages 20 to 59 with household income of $50,000 or more. The survey was conducted online
by Environics Research from July 22 - August
7, 2015. National results were weighted by age, gender and
region.
About Manulife Bank
Established in 1993, Manulife Bank was the first federally
regulated bank opened by an insurance company in Canada. It is a Schedule l federally chartered
bank and a wholly-owned subsidiary of Manulife. As Canada's first advisor-based bank, it has
successfully grown to more than $20
billion in assets and serves clients across Canada.
About Manulife
Manulife Financial Corporation is a leading
international financial services group providing forward-thinking
solutions to help people with their big financial decisions.
We operate as John Hancock in
the United States, and Manulife
elsewhere. We provide financial advice, insurance and wealth
and asset management solutions for individuals, groups and
institutions. At the end of 2014, we had 28,000 employees,
58,000 agents, and thousands of distribution partners, serving 20
million customers. At the end of September 2015, we had $888 billion (US$663
billion) in assets under management and administration, and
in the previous 12 months we made more than $23 billion in benefits, interest and other
payments to our customers. Our principal operations are in
Asia, Canada and the
United States where we have served customers for more than
100 years. With our global headquarters in Toronto, Canada, we trade as 'MFC' on the
Toronto, New York, and the Philippine stock exchanges
and under '945' in Hong
Kong. Follow Manulife on Twitter @ManulifeNews or
visit www.manulife.com or www.johnhancock.com.
SOURCE Manulife Financial Corporation