What you need to know
Fuelled by a prolonged low interest rate environment, Canadians now hold $2.3 trillion of household debt. The economic fallout of the COVID-19 pandemic is likely to result in more households having difficulty in meeting their debt obligations. The massive wave of support programs rolled out by governments across the country seem to have provided much-needed financial relief to many Canadians, while lenders have also extended a hand through relief measures. In March, the Bank of Canada reduced the policy interest rate by 150 basis points to help ease borrowing costs.
Going forward, some vulnerable households are likely to fall behind on their loan payments if incomes do not recover by the time payment deferrals end. Given the uncertain nature of the economic recovery, it will take some time for employment, household income and confidence to return close to the pre-pandemic path. The housing market may also face challenges going forward. For example, immigration was playing a key role in boosting housing demand before the pandemic. This source of demand could take some time to be restored as backlogs are cleared and travel restrictions are gradually eased across the world.
Key issues covered in this Report
The impact of COVID-19 on consumer attitudes towards debt.
Consumer attitudes and behaviour related to consumer debt (credit cards, mortgages, loans and lines of credit). It explores product ownership, amount of debt held, debt payment behaviours, attitudes towards personal finances, impact of COVID-19 on debt and attitudes towards debt. It also examines the attitudes and psychological reactions to having debt as well as some quantitative indicators such as the amount of debt held.
This Report was written between September 14 and October 8, 2020.
