53% of Canadians on the brink of insolvency

"The party is over.

A new survey by MNP Ltd. has found that 53 per cent of respondents said they are $200 or less away from not being able to meet all of their monthly bills and debt obligations. The number is alarming as it marks a five-year high in the agency's consumer debt index and marks a 10-point jump from a December survey.
This number includes the 30 per cent who said they are already insolvent, with no money left over at the end of the month."


"Households may have tried to save more and spend less amid the pandemic, and - to be fair - some have been very successful at doing just that. However, there are others who have taken on more debt due to job loss, wage reductions or desperately trying to keep small businesses afloat.
According to MNP, a quarter of Canadians took on more debt amid the pandemic. Among respondents, 20 per cent said they used savings to pay bills, 14 per cent used credit cards, seven per cent used a line of credit, while three per cent took out a bank loan or deferred mortgage payments, respectively.
“Those taking on more debt are becoming increasingly vulnerable to interest rate increases in the future. They might find that their debt becomes unaffordable when that happens,” Bazian wrote. "

https://www.bnnbloomberg.ca/53-of-ca...c4LdME69aLQkJs

Posted that yesterday in a thread .

If interest rates go back to where they were less than 2 years ago many more will fold.

This crazy house market Could be a disaster in 5 years from now. No one is thinking about the future everyone is just stuck in a rut of now and covid .

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I'm sticking to my guns. Something will trigger a housing market collapse ... perhaps rising interest rates. At that stage, there will be a lot of value in the residential market ... so I'll wait for then, before I invest, even though it will likely take years.

So this confusing in other articles they say Canadians have saved hordes of cash as well people are buying up everything.

So which is it?

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Originally Posted by greatwhite

So this confusing in other articles they say Canadians have saved hordes of cash as well people are buying up everything.

So which is it?

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The 'hordes' of cash is propaganda...the working class is using any savings to pay down debt...but the Liberals , not understanding that concept are telling us that they're going to out after the lockdowns and spend like crazy and stimulate the economy. Freeland has said that a few times.

There is big spending on big home reno projects and new homes....at least there was till wood tripled in price.

Once the pandemic is over and the Banks start asking for their mortgage payments again...there will be a reckoning.

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According to MNP, a quarter of Canadians took on more debt amid the pandemic. Among respondents, 20 per cent said they used savings to pay bills, 14 per cent used credit cards, seven per cent used a line of credit, while three per cent took out a bank loan or deferred mortgage payments, respectively.

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"Higher rates should be a real concern to those who borrow and naively think rates won't head higher once the economy warrants it. In fact, I find it outrageous that six in ten respondents said that the current low-rate environment makes it a good time to buy things they might not otherwise be able to afford."

So this is the "key" paragraph to me, why would anybody buy something they know they cannot really afford and hope that the interest rates do not go up?

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Originally Posted by Gilroy

"Higher rates should be a real concern to those who borrow and naively think rates won't head higher once the economy warrants it. In fact, I find it outrageous that six in ten respondents said that the current low-rate environment makes it a good time to buy things they might not otherwise be able to afford."

So this is the "key" paragraph to me, why would anybody buy something they know they cannot really afford and hope that the interest rates do not go up?

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I think they are pushing for it the real estate agents . They will push for a sale that's why we are seeing more bids and the offers go up substantially . Easy payments for now with teaser rates until it all comes to an end.

Heck even our government thinks this low interest rates are fantastic . If you can afford it I guess it's ok but for many they will be burned.

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Originally Posted by Gilroy

So this is the "key" paragraph to me, why would anybody buy something they know they cannot really afford and hope that the interest rates do not go up?

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You'd have to stand outside any RV dealership, ATV/Snowmachine dealership, Marine dealership or any other multitude of toy stores to ask that question. You may get a lot of "deer in the headlights" looks, but it's a good place to ask that question. Just don't expect a sensible answer?

I think a lot of people are "investing" in real estate as a hedge against the impending rise in inflation. The Canadian and U.S. governments have been printing money at an alarming rate the last few years, somethings go to give. That being said paying an over inflated price for real estate does little to remedy the situation. For sure agents are embellishing the market and making out like bandits. There is a huge transfer of wealth happening now from the middle class to the "elites" and I believe all markets are being manipulated to facilitate the event.

They need to cool down the housing market. I am not sure how they will do it without doing more harm than good.

- Increase the stress test requirements - hurt 1st home buyers (who are really not the problem)
- Increase interest rates - fair and equitable IMHO.......would also benefit investments
- Remove the exception of capital gains on primary residence -or- change the rules. Presently one needs to live in a house (as their primary residence) for 12 months before selling it and avoiding capital gains. House flippers drive up demand and price in certain areas. Removing capital gains would not help because empty nesters would be more apt stay in their house longer to defer the tax and therefore limit the house stock available for first time buyers. Extending the time period to 5 or 7 years would definitely limit the number of flipped houses in the market but not eliminate it in certain areas. But there are always loop holes and people will find and exploit them.

Personally I find that COVID is the driving factor. People that just recently had the ability to work from home are moving into areas they want to live - the migration from urban to rural areas. The issue is when things get back to normal - and they will, companies will start recalling workers back to the office and some tough decisions will have to be made. The people that have decided to move outside GTA can now deal with a long commute or you can choose to leave your job, and find something closer to where you now live. Most companies do not want to issue office workers with a T2200 because that may set a precedence for permanently 'working from home' rather than 'working from home' as a temporary measure due to the pandemic.

There are a lot of people that think this is the new norm - working remotely but I highly doubt it. Let's take Joe for example. Joe works in the finance team and has an office in Mississauga. Joe's salary is $100k/year because that is the going wage for people in this industry living in the GTA. Joe decides to move to Burks Falls after selling his house in Oakville because he can now work remotely. Why is the company still paying Joe a $100k salary when his cost of living has been reduced greatly and is no longer in many face to face meetings. If Joe's job can be done remotely why would the company not near source his job to in someone in Northern Ontario or Eastern Canada who would do it for $60k/year? Why would the company continue to pay a GTA salary when the person is no longer living in the GTA?