Another major financial institution’s brought out survey results
suggesting Canadians are concerned about debt. Actions speak louder than words.
According to CIBC, the top priority for Canadians in 2015 is to pay down debt. The survey, done by A.C. Nielsen, interviewed 1,014 Canadians by telephone between November 13 and 17.
The need to pay down debt isn’t a new one.
This is the fifth year CIBC’s conducted the poll with the need to pay down debt being the top priority each and every year. Canadians aged 45-64 are focused on debt repayment to the detriment of savings. Last year, fifteen percent of this cohort said their number one priority would be debt repayment; this year it’s more than doubled to thirty-one percent.
Meanwhile, the priority to build savings has barely budged. In 2011, ten percent of Canadians surveyed identified building savings as a top priority; in 2015 that’s up two percentage points to twelve percent.
The desire to reduce debt is an admirable one.
However, if statistics about household debt as a percentage of disposable income mean anything, Canadians aren’t walking the talk. Not even close.
In the third quarter household debt hit 162.6 percent of disposable income prompting the Bank of Canada to suggest this is the biggest threat to our economy.
At the end of 1999 the ratio was 108.4. Fourteen years later it’s 50% higher. Low interest rates and rising home prices have created an environment of “easy money” where debt is our best friend. Our standard of living’s gotten better one HELOC at a time.
Financial advisors have one Herculean task ahead of them if this trend continues.
Should the Bank of Canada’s worst fears come true and housing prices flatten like a pancake there will be no money available for investments or savings – just debt repayment.
And then we’ll be back at square one.
We can only hope Canadians are serious about debt repayment in 2015. But, if history is the judge, we’ve got a better chance of winning the lottery.