According to a Manulife Bank of Canada debt survey, released Thursday, nearly 40% of homeowners didn’t have enough funds to cover household expenses at least once in the past year.
It also found two in three homeowners expect housing prices to increase in the next year, putting further pressure on buyers in the coming year.
"The challenge faced by many Canadians is that their income is relatively stable from month-to-month, but their expenses can vary significantly," Rick Lunny, president and chief executive officer of Manulife Bank of Canada, said in a release. "Access to rainy day savings or a low-cost line of credit are good options to safeguard against these fluctuations.
“However, if your backup plan is to carry high-interest credit card debt or borrow from a family member – you could be putting undue stress on your finances or relationships."
The increasing financial stress on homeowners points to an opportunity for brokers to advise new clients on the best path to homeownership; explaining how a rate increase will affect them and how to properly manage debt loads will prepare buyers to better manage their finances.
The findings also suggest that many Canadians may be taking on larger mortgages than they are financially equipped to handle – another area brokers can take on the role of advisor.
The study did find that nearly 75% of homeowners feel prepared to handle an unexpected household expense. However, the average amount in emergency funds is low.
With Canadians struggling with household expenses and home prices on the rise, broker services are perhaps more important now than ever.