Mortgages Aren't Debt, Nearly Half Of Canadians Say

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Nearly half of Canadians don’t see their mortgage as being debt, according to survey from Manulife.
Nearly half of Canadians don’t see their mortgage as being debt, according to survey from Manulife.

Nearly half of Canadians don’t see their mortgage as being debt, according to a survey from Manulife.

The survey of more than 2,300 Canadians found 45 per cent would consider themselves debt-free if the only outstanding debt they had was a mortgage.

But this seems to be a generational difference -- the younger you are, the likelier it is you don’t see a mortgage as debt.

Fully 68 per cent of respondents in their twenties didn’t consider mortgages to be debt, while only 29 per cent of those in their fifties agreed.

Jason Daly, Manulife’s VP for marketing and business development, suggests this may be in part because young people are more likely to carry high-interest credit card debt, and are focused on paying that down.

But it also “could be a result of our current low interest rate environment, which makes debt management seem less intimidating than it was in the ‘80s and 90’s, when rates were much higher,” Daly said in a statement.

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Those low interest rates are making consumers more comfortable taking on debt and even talking about debt with their household, Daly says.

The survey finds nearly four in 10 homeowners are more comfortable carrying debt than their parents, and nearly 30 per cent say they discuss their debt with their family more than their parents did.

The Manulife survey found Canadians are unsure if they are in better shape to handle debt than their parents were, with 38 per cent saying it will be harder to pay off, and 23 per cent saying it will be easier.

Canada’s household debt has been near all-time highs above 163 per cent of household income for the past few years, after doubling, relative to income, over the past 25 years.

Mortgage debt continues to grow in Canada, reaching $1.1 trillion in total in the first quarter of this year, up 0.6 per cent over the previous quarter, StatsCan reported. But that marks the slowest pace of mortgage debt uptake since 2009, suggesting Canadians may be taking to heart warnings that debt may be getting out of control in the country.

One such warning came last week from Canada's banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), whose second-in-command last week warned that low interest rates and high house prices have made lending riskier in Canada than it was a decade ago.

Another alarm came from the Bank for International Settlements (BIS), which issued a report last week that identified Canada as a country where early warning signals of a banking crisis are flashing.

The BIS said credit in Canada is growing 5.6 per cent faster than it should be, given historical norms, and it’s in these circumstances that lenders often make bad loans, weakening the banking system.

However the report identified several countries at much greater risk of a banking crisis than Canada, including China, Brazil, India, Switzerland and Turkey.

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