Consumer Attitudes Towards Debt - Canada - July 2015

INTRODUCTION
Methodology
Abbreviations
Regional classifications
Excluded
EXECUTIVE SUMMARY
The market
Overall negative impact of lower oil prices on the Canadian economy
Outlook on the real estate and housing market
Household debt in Canada
Population count and growth in Canada
Companies and innovations
The consumer
Around three in five Canadians have outstanding debt
Figure 1: Ownership of debt products, April 2015
More than a third of those with debt owe more than $100,000
Figure 2: Amount of outstanding debt held, April 2015
Majority of Canadians expect to be debt-free and not overly dependent on government old age security at retirement
Figure 3: Attitudes related to personal finances, April 2015
British Columbians feel most vulnerable to interest rate hikes
Figure 4: Attitudes related to debt, April 2015
What we think
ISSUES AND INSIGHTS
Are Canadians carrying too much debt?
The facts
The implications
Impact of marketplace lenders on the consumer lending business in Canada
The facts
The implications
A third of young Canadians are stressed about money and looking for help
The facts
The implications
Are British Columbians more likely to be impacted by potential interest rate hikes?
The facts
The implications
TREND APPLICATION
Trend: Click and Connect
Trend: Guiding Choice
Trend: Totophobia
MARKET FACTORS
Key points
Economic overview
Overall negative impact of lower oil prices on the Canadian economy
Figure 5: Canada’s GDP, by quarter, Q4 2008-Q4 2014
Figure 6: Household disposable incomes and savings in Canada, by quarter, Q4 2008-Q4 2014
Figure 7: Canada’s unemployment rate, by gender, 2008-15
Impact of interest rates, inflation and exchange rates
Figure 8: Inflation rates in Canada (%), 2004-14
Bank of Canada keeps interest rate steady at 0.75%
Figure 9: Canada bank rate, 2005-15
Outlook on the real estate and housing market
Consumer Confidence
Figure 10: Consumer Confidence Index, monthly, January 2008-February 2015
Household debt in Canada
Demographic overview
Population count and growth in Canada
Figure 11: Share of population of Canada, by territory/province, 2015 (projected)
Minority groups account for less than 20% of Canada’s population
Figure 12: Estimated population of Canada, by ethnicity, 2011
Canada’s population is expected to age in the coming years
Figure 13: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
Figure 14: Projected trends in the age structure of the Canada population, 2014-19
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
COMPANIES AND INNOVATIONS
Key points
OnDeck Peer-To-Peer Lending Expands To Canada
Borrowell set to become second member of Canadian marketplace lenders’club
Earnest uses “merit-based” credit scoring factors
UK – Door-to-door consumer lending
Lending Club partners with BancAlliance, a national consortium (US) of 200 community banks
Colombia – Credit fairs reach the masses
Use of personal data to make lending decisions
PayPal expands into the lending space
Goldman Sachs entering the online lending market
Float Money (US)
Facebook enters the money transfer market
Some popular apps for debt management
THE CONSUMER – OWNERSHIP OF DEBT PRODUCTS
Key points
Around three in five Canadians have outstanding debt
Figure 15: Ownership of debt products, April 2015
Debt ownership peaks among 25-44s
Figure 16: Ownership of debt products, by age, April 2015
About a third have two or more products with outstanding debt
Figure 17: Repertoire of ownership of debt products, April 2015
THE CONSUMER – AMOUNT OF DEBT HELD
Key points
More than a third of those with debt owe more than $100,000
Figure 18: Amount of outstanding debt held, April 2015
Figure 19: Amount of outstanding debt held, by household income, April 2015
THE CONSUMER – ATTITUDES RELATED TO PERSONAL FINANCES
Key points
Summary of attitudes towards personal finances
Figure 20: Attitudes related to personal finances, April 2015
Majority of Canadians expect to be debt-free and not overly dependent on government old age security at retirement
Figure 21: Attitudes related to retirement, April 2015
Higher income earners more likely to label debt as “good” and “bad”
Figure 22: Attitudes related to spending habits, April 2015
About half of consumers with debt have no problem meeting their debt repayments
Figure 23: Attitudes related to comfort with debt payments, April 2015
THE CONSUMER – INTEREST IN DEBT MANAGEMENT TOOLS
Key points
Usage of debt management tools is low
Figure 24: Interest in debt management tools, April 2015
Younger Canadians more likely to be interested in debt management tools
Figure 25: Interest in debt management tools (have not used but would be interested in using), April 2015
THE CONSUMER – ATTITUDES TOWARDS DEBT
Key points
Summary of attitudes towards debt
Figure 26: Attitudes related to debt, April 2015
British Columbians feel most vulnerable to interest rate hikes
Figure 27: Attitudes related to debt levels, April 2015
Young Canadians more likely to feel that debt causes a significant amount of stress in their life
Figure 28: Attitudes related to debt and stress, April 2015
Canadians have somewhat contradictory views on holding debt
Figure 29: Attitudes related to risk tolerance, April 2015
THE CONSUMER – CHINESE CANADIANS AND DEBT
Key points
Chinese Canadians more likely to have mortgages and less likely to have auto loans
Figure 30: Ownership of debt products, Chinese Canadians versus. Overall population, April 2015
Chinese Canadians are confident about their financial future and are comfortable with their debt levels
Figure 31: Attitudes towards personal finances, Chinese Canadians vs. Overall population, April 2015
THE CONSUMER – TARGET GROUPS
Key points
Four target groups
Figure 32: Target groups, April 2015
Stressed (29%)
Cautious (28%)
Credit Confident (22%)
Vulnerable (21%)