A recent survey revealed insight into how Canadians are (or aren’t) managing their debts and finances.
As it turns out, those with the most amount of debt above their heads are more likely to better manage bill payments than those with fewer dollars in the debt department.
The study showed that non-homeowners were more likely than homeowners to have trouble managing their debts, despite non-homeowners having less debt to pay.
The study findings were based on over 874,000 credit reports of Borrowell members ages 20 to 69 for August 2021 across 15 major Canadian cities. The goal of the study was to understand how much mortgage and non-mortgage debt homeowners and non-homeowners hold, along with how likely they were to have a missed bill payment on their credit report.
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For Canadian consumers with a mortgage trade on their credit report, their average mortgage balance was $359,597 and their average non-mortgage debt was $34,290; in comparison, consumers without a mortgage had debt averaging $20,183.
Furthermore, homeowners in the notoriously pricey Toronto reported a jaw-dropping 34.7 times more total debt than non-homeowners at $608,296 compared to $17,537 (not that that's entirely surprising in the city's dramatic real estate climate).
However, Canadians without a mortgage were 2.2 times more likely to have a missed bill payment on their credit report. In Toronto, non-homeowners are 4.3x more likely to have missed bill payments, an indicator of challenges in meeting living expenses. Undoubtedly, the city's sky-high and rising rent prices are a contributor to this. So is the fact that homeowners are generally in a better financial situation than renters (but not always).
"Within all 15 Canadian cities included in the study, homeowners have lower rates of missed bill payments than non-homeowners. Canadians who are able to own homes tend to have higher incomes than non-homeowners," reads the report. "This means they are able to carry higher debt balances with a lower risk of missing bill payments. The cities that have the biggest difference in missed bill payment rates between homeowners and non-homeowners are Surrey (0.059 vs. 0.281), Toronto (0.030 vs. 0.129) and Vancouver (0.044 vs. 0.196)."
"People across the country experience affordability issues in different ways. Some Canadians have more trouble managing their debt and finances than others,” reads the report.
When it comes to the non-homeowners, sky-high rent and living expenses prices in cities like Toronto, Vancouver, and even Hamilton don't help the get-out-of debt cause.
The findings also reveal that on average, two out of every 10 Canadian consumers have at least one missed payment on their credit report. One in four consumers in Edmonton and Calgary have a missed payment on their credit report, compared to about one in 10 consumers in Toronto and Montreal.
The cities that have the biggest difference in missed bill payment rates between homeowners and non-homeowners are Surrey (0.059 vs. 0.281), Toronto (0.030 vs. 0.129), and Vancouver (0.044 vs. 0.196). Non-homeowners in these cities are over four times more likely to have missed bill payments compared to their home-owning counterparts.
Not surprisingly, the rising cost of living has been repeatedly identified as one of the top election issues in Canada, with each major party making promises on the housing affordability front. Whether or not they’ll make a difference -- or just sound great in theory -- will remain to be seen.
Here's to hoping.
