Table of Contents
Executive Summary
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- Top takeaways
- Market overview
- Impact of COVID-19 on debt attitudes
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- Figure 1: Short, medium and longer-term impact of COVID-19 on attitudes towards debt, October 2020
- Opportunities and Challenges
- Household debt is a challenge for vulnerable households
- Debt has the least impact on over-55s
- Debt has a significantly greater impact on younger Canadians
- COVID-19 has worsened the financial situation of almost half of borrowers
- Around three in four 18-34s believe apps can help manage finances better
- COVID-19 has helped shift some focus to mental health and debt
- COVID-19 spurs BNPL
- Around three in five parents with young children have unsecured debt
- Next normal for lenders
The Market – Key Takeaways
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- Economic impact of COVID-19
- CMHC tightens lending standards for home buyers
- New benefits as CERB ends
- Mortgage deferrals also help contain delinquencies
- Credit scoring gets an upgrade
Market Factors
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- Impact of COVID-19 on debt attitudes
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- Figure 2: Short, medium and longer-term impact of COVID-19 on attitudes towards debt, October 2020
- Economic impact of COVID-19
- Temporary spike in household savings rate
- CMHC tightens lending standards for home buyers
- New benefits as CERB ends
- Mortgage deferrals also help contain delinquencies
Market Opportunities
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- COVID-19 mortgage and loan relief measures
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- Figure 3: Cumulative number of deferrals approved, as of September 4, 2020
- Credit scoring gets an upgrade
- Quebec considers making credit reports free
- Fintech challengers
- Brim Financial
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- Figure 4: Brim Financial Instagram post, April 2020
- Other challengers
Companies and Brands – Key Takeaways
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- BNPL takes off
- Mogo launches prepaid Visa with automatic carbon offsets
- A 'Boost' to help get ahead of your bills
- COVID-19 impact on marketing campaigns
Competitive Strategies
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- Buy now, pay later
- COVID-19 spurs BNPL
- Afterpay comes to Canada
- Sezzle enters the Canadian market
- Klarna becomes Europe’s biggest fintech unicorn
- Visa Installments pilots in the US
- Apple introduces instalment pay plans (US)
- Splitit partners with MasterCard to expand BNPL
- Citi introduces buy now, pay later for Amazon purchases in the US
- Buy now, pay later advertisers bet on Instagram
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- Figure 5: Afterpay: Sarah Hyland Instagram post, February 2020
- Debt management apps can help some borrowers
- Splitwise
- epost
- Debt Manager
- Canadian Mortgage app
- Debt planner pay-off
- PocketGuard
- Wellspent helps users “Tinder” their spending
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- Figure 6: Wellspent | Reflection | Basic, June 2019
- Mogo launches prepaid Visa with automatic carbon offsets
- A 'Boost' to help get ahead of your bills
Marketing Campaigns
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- HomeEquity shows what to love about staying home
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- Figure 7: Home is Everything – Live in the Home You Love, April 2020
- HomeEquity Bank’s new campaign to fight fraud
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- Figure 8: Catch the scam: the grandparent scam, August 2020
- Borrowell reaches out to customers to help them with financial stress
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- Figure 9: Borrowell email campaign on managing financial stress, April 2020
- COVID-19 impact on marketing campaigns
The Consumer – Key Takeaways
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- Around half of Canadians have secured and unsecured debt
- Around half of borrowers are comfortable with their debt levels
- COVID-19 has worsened the financial situation of almost half of borrowers
- Debt has a significantly greater impact on younger Canadians
Debt Ownership
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- Nearly half owe less than $50,000
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- Figure 10: Amount of debt held, July 2020
- Around half of Canadians have secured debt
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- Figure 11: Secured debt ownership, July 2020
- Ownership is higher among 35-54s
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- Figure 12: Secured debt ownership (select), by age, July 2020
- Credit card is the most common type of unsecured debt
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- Figure 13: Unsecured debt ownership, July 2020
- Ownership declines with age, while increasing among financially vulnerable
- Growing student debt is a concern
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- Figure 14: Unsecured debt ownership (select), by age, July 2020
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- Figure 15: Unsecured debt ownership (select), by current financial situation, July 2020
- Some types of unsecured debt can be dangerous
- Around three in five parents with young children have unsecured debt
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- Figure 16: Moka Instagram post, July 2020
Debt Management
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- Around half of borrowers are comfortable with their debt levels
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- Figure 17: Debt management, July 2020
- Current financial situation has a major influence on debt management
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- Figure 18: Debt management (select), by current financial situation, July 2020
- Men are more confident and comfortable with debt
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- Figure 19: Debt management (select), by gender, July 2020
- A third have recently cut spending to pay down debt
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- Figure 20: Debt payment behaviours, July 2020
- Debt has the least impact on over-55s
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- Figure 21: Debt payment behaviours, 18-54s vs over-55s, July 2020
Managing Finances
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- COVID-19 has worsened the financial situation of many
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- Figure 22: Managing finances, July 2020
- Around three in four 18-34s believe apps can help manage finances better
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- Figure 23: Managing finances, by age, July 2020
- Is impulsive spending a factor in worsening financial health?
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- Figure 24: Managing finances (select), by current financial situation, July 2020
- Around one in five men have borrowed to invest in the stock market
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- Figure 25: Managing finances (select), by gender, July 2020
Debt Attitudes
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- A third have more debt due to the pandemic
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- Figure 26: Debt attitudes, July 2020
- Debt has a significantly greater impact on younger Canadians
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- Figure 27: Debt attitudes (select), 18-44s vs over-45s, July 2020
- COVID-19 has helped shift some focus to mental health and debt
- Gender differences emerge
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- Figure 28: Debt attitudes (select) – over-55s, by gender, July 2020
- Younger consumers and ethnic minorities have more debt as a result of COVID-19
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- Figure 29: Impact of COVID-19 on debt, by age, July 2020
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- Figure 30: Impact of COVID-19 on debt, by ethnicity and race, July 2020
- Weaker financial situation increases vulnerability
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- Figure 31: Debt attitudes (select), by current financial situation, July 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Abbreviations and terms
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