Canadians’ debt loads worsening

Survey finds half of population lives paycheque to paycheque

Nearly half of all Canadians are draining their bank accounts between pay periods, and many are adding to their debt levels to cover expenses as they grapple with an uncertain economy, according to a poll released Wednesday.

The Canadian Payroll Association survey found that 48 per cent of respondents believe it would be difficult to make ends meet if their paycheque was delayed by a week. Four in 10 Canadians said they spend all or more of their take-home pay, while nine in 10 carry some form of debt.

One in 10 of the survey’s respondents said they don’t think they’ll ever be debtfree.

“A significant percentage of working Canadians carry debt.” PATRICK CULHANE CANADIAN PAYROLL ASSOCIATION PRESIDENT

Aquarter of the 5,000 people polled said they wouldn’t be able to pull together $2,000 in an emergency.

“A significant percentage of working Canadians carry debt, have a gloomy view of their local economy and are fearful of rising interest rates, inflation, and costs of living,” Patrick Culhane, the CPA’s president and CEO said in a statement. The most common type of debt cited by respondents was a mortgage (26 per cent), followed by creditcard debt (18 per cent), car loans (17 per cent) and a line of credit (16 per cent).

Ontarians appeared to be more pessimistic than the country as a whole about their financial situations, with 42 per cent saying they feel overwhelmed by their level of debt. That was higher than the national average of 39 per cent and the three-year average of 36 per cent.

Meanwhile, the survey found just over one-third of Canadians expect the economy to improve in the coming year.

The Canadian economy shrank by 1.6 per cent in the second quarter of this year, but much of that was attributed to Alberta’s wildfires in May, which halted oil production.

Still, many economists are worried that non-energy exports are not rebounding to the degree anticipated when the dollar started its recent decline against the U.S. greenback. The Bank of Canada on Wednesday maintained its near-historic low overnight lending rate of 0.5 per cent, but was cautiously optimistic the economy would improve in the second half of this year.

It warned again about the risk of households taking on too much debt, considering the large mortgages Vancouverites and Torontonians have been taking on to purchase in those markets.

“While there are preliminary signs of a possible moderation in the Vancouver housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise.”