Canadian homeowners’ mortgage worries highlighted in recent Manulife Bank poll

TORONTO – Nearly three quarters of Canadian homeowners say they would have difficulty paying their mortgage if their payments were to increase by more than 10 per cent, says a new survey by Manulife Bank.

Thirty-eight per cent of those polled say their mortgage bills could rise between one to five per cent before they would have financial difficulty; 20 per cent say they could sustain an increase in payments between six to 10 per cent before having trouble; and 14 per cent say any hike would be a problem.

Twenty-two per cent said they could handle a payment increase of between 11 to 30 per cent, while the remaining seven per cent didn’t know or were unsure.

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“What these people don’t realize is that we’re at record low interest rates today,” said Rick Lunny, president and CEO of Manulife Bank (TSX:MFC), adding that a 10 per cent increase in mortgage payments could be the result of as little as a one per cent interest hike.

“When you put it into that context, they’re not really prepared for what is inevitable. Sooner or later, interest rates are going to rise.”

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The survey found that 45 per cent of millennial homeowners — those aged between 20 to 35 — would have the most difficulty making their mortgage payment within three months or less if the primary income-earner in their families were to suddenly become unemployed.

Millennials were also the group that on average had the highest amount of outstanding mortgage debt, at $223,000, while gen X-ers (those aged 36 to 52) had an average of $202,000 owing. Baby boomers (ages 53 to 70) had $180,000.

Lunny said many millennials are unprepared to deal with a financial emergency due to a lack of financial literacy and soaring amounts of debt. That group has seen their mortgage debt rise more than any other generation, according to the survey.

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The survey was conducted online in English and French from Feb. 1 to 14. It polled 2,098 homeowners between the ages of 20 to 69 with household incomes of $50,000 or higher.

The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.