Nearly 1 in 3 Canadians debt-free despite ongoing COVID-19 pandemic: poll

Fewer Canadians say they are in debt this year, despite the financial hardships that have accompanied the ongoing COVID-19 pandemic.

That’s according to a new survey published on Thursday, conducted online by Ipsos for Manulife Bank.

The 2021 Manulife Bank of Canada Debt Survey polled 2,001 Canadians between the ages of 20 and 69 who live in households with an income of more than $40,000.

The survey found nearly one-third (32 per cent) of respondents reported having no debt, marking a five per cent increase from fall 2020, and an 11 point increase since the fall of 2019.

“This shows us that during the pandemic, many Canadians have been doing an admirable job of paying down their debt and planning for their future,” Rick Lunny, president and CEO of Manulife Bank said in a press release.

Lunny said “continuing to exercise some restraint at this point” could “certainly help them achieve their financial goals in the long run.”

The report said the share of Canadians carrying “forms of debt instruments” has also declined over the pandemic and “tracks well below what was observed prior to the pandemic.”

Only 30 per cent of Canadians said they had a line of credit, marking a four per cent decrease over 2020 and a six per cent drop from 2019.

The number of Canadians who had personal loans also dropped to 16 per cent, a five per cent drop from fall 2020, and a six point drop from 2019.

The most common types of debt were credit cards with a balance, mortgages and car loans, with 51 per cent, 48 per cent and 37 per cent of respondents reporting them respectively.

The survey also found 11 per cent of Canadians said they had “a lot of debt,” while 29 per cent said they had “some debt.”

Twenty-eight per cent said they had “very little debt.”

That means 68 per cent of Canadians reported having at least some form of debt outside of their mortgage.

But, that figure marks a five per cent decrease from the 73 per cent who reported debt earlier in the pandemic. What’s more, before the pandemic, 79 per cent of respondents said they had some form of debt outside of their mortgage.

Overall, eight per cent of respondents said they “strongly believe” they have become more fiscally responsible as a result of the pandemic, with another 43 per cent saying they “somewhat agreed” with that statement.

SPENDING HABITS AND THE COST OF LIVING

While the pandemic appears to have allowed many Canadians to pay off debt, almost half of the survey’s respondents said their spending is outpacing their income.

This is up from 35 per cent of those surveyed who agreed to that statement in the spring of 2021, and the 37 per cent of Canadians who agreed in the fall of 2020.

This year, only 13 per cent said their income was increasing faster than their spending.

What’s more, an overwhelming majority -- 88 per cent -- said they are worried about the inflation rate in Canada.

Further, 64 per cent of Canadians said they felt the cost of living has increased. This marks a three per cent increase over responses gathered in the spring of 2021.

Nineteen per cent of respondents said the cost of living had “increased a lot,” while 45 per cent said it has “increased somewhat.”

The survey also found Canadians plan to be more cautious with their spending this holiday season.

The poll found only 61 per cent of respondents said they were planning to buy gifts -- a five per cent decrease from fall 2018.

Only about one in five (22 per cent) said their holiday shopping budget was higher this year, than it was last year. Fifty-two per cent said their budget is the same as the previous year. Fourteen per cent said their budget would be a “bit less,” while nine said it would be a “lot less.”

HOUSING PRICES

The survey’s respondents were also asked about housing prices.

The report found 73 per cent of Canadians who are not homeowners said they would like to own a house, but can’t afford to.

A majority (71 per cent) of the survey’s respondents also said that they were worried about housing prices in their community, with 87 per cent saying they believe there is an affordable housing crisis across the country.

Lunny said despite the fact that housing prices are at “record highs,” home ownership is “achievable in the current interest rate environment – for those who can make the down payment.”

“That’s why flexible financial planning is imperative,” he continued. “No matter what your situation is or the environment we operate in, people need to have a good understanding of where their money goes, how they can minimize their current spending and how they can find ways to save more towards their goals.”

Methodology: Manulife Bank of Canada surveyed 2,001 Canadians online in all of the country’s provinces between the ages of 20 and 69 with household incomes of more than $40,000. The survey was conducted by Ipsos between October 14 and 18, 2021. The results were weighted by gender, age, region and education. The survey has a credibility interval of +/-2.5 per cent 19 times out of 20, of what the results would be had all Canadian adults between 20 and 69 been surveyed.