Canada debt crisis: The economic landscape of Canada would now be characterised by a sense of tension and unease. Despite the appearance of prosperity and growth, the reality is that many individuals and households are struggling to keep their heads above water as they navigate the ever-rising tide of debt.
The rising debt of Canada is tearing the socioeconomic fabric of the nation, isolating and humiliating people who are already struggling to make ends meet. O Canada! Owe Canada! Look what has happened to you. More than half of the population is in debt and the shocking fact here is not only this generation but even the upcoming generations are burdened by the weight of debts. Their futures lay captive to the whims of interest rates and dark economic tides.
Households now owe $1.83 on average for every $1 of after-tax income they get, which is a higher rate than in the United States, UK, Germany, France, and Japan due to decades of debt growth. People of Canada are drowning in debt as a nation at a time when interest rates are at multi-decade highs.
A research was set up to find out how much people actually owe in these risky times for borrowing, realising that averages like the debt-to-disposal-income ratio mean little to individuals. With the Carrick on Money e-mail newsletter, a casual and anonymous survey was introduced in January. More than 6,150 responses came in from readers of the Globe and Mail. The findings of the survey are disturbing.
The poll results include people between the ages of 18 and 29; 30 to 39; and so on, up to 70+. The statistics show which generations (on average) have the most debt, how much people owe (on average), and how frequent it is to have different sorts of debt at different ages. The key narratives that the debt data tells are listed below.
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Young Adult homeowners in debt
Even with the recent price drops, homes are still pricey in Canada. Yet, a significant 71% of young adults in the poll have a mortgage. That is somewhat higher than the 66.5 percent national house ownership rate predicted by Statistics Canada for 2021.
The survey’s thirty and fortysomething aged participants typically have mortgage debt of close to $500,000. Average figures in real estate, as always, show a mix of pricey metropolitan cities, including the greater Vancouver and Toronto areas, and less expensive places to live. In December, the average price of a resale home nationwide was $626,318.
Just 22% of those in their 60s and 11% of those in their 70s reported having a mortgage. But, those who do have mortgages shoulder a heavy burden. People in their 40s, let’s call them young Gen Xers or old millennials, are the most likely to have mortgage debt.
Student Debt becoming heavy
In the study, respondents in their twenties with student loans reported an average level of debt of $21,905, while respondents in their thirties with student loans reported an average debt of a little over $26,000.
The Burden of Credit Cards becoming overwhelming
Credit card rates are exceptionally high, even in a period of historically high-interest rates. Low-rate cards have annual percentage rates between 11.99 and 13.99 percent, but standard cards often have rates between 19.99 and 20.99 percent.
Compared to other estimates of card balances, the average card amount reported by those who do have one is high at $6,343. A handful of jumbo-sized card balances revealed in the study, including several at $50,000 or higher, could be one cause.
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Canadians and the upcoming Canadians’ future have been doomed. Doomed in debt. There may be a sense of division between those who are managing their finances responsibly and those who are not, leading to a lack of social cohesion and trust.
Visually, the country may appear prosperous and modern, with shiny new buildings and bustling urban centres. However, there may also be signs of strain and neglect, such as crumbling infrastructure and a lack of investment in social services.
Overall, a country with high levels of debt in its population may appear to be a place of contradiction and tension, where the appearance of prosperity masks a deeper sense of instability and unease.
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