Almost one in five Ontario residents owe more than they own or earn, making them technically insolvent and at risk of bankruptcy, a new poll finds.
Credit card holders who miss two minimum payments will now get dinged with a higher interest rate on their next bill as Canadian banks begin to crack down on customers in arrears.
Eastern Canadians led the country in owing more than they own, with 28% in Quebec and 24% in Atlantic Canada. Residents in Alberta, Saskatchewan and Manitoba tied at a 23%, with Ontarians at 16% and British Columbians at 14%.
The survey, conducted by Ipsos Reid for MNP Ltd., a Canadian personal insolvency practice, also found the Canadians are dangerously ignorant about their debt levels. When asked to name the average debt to income ratio in Canada, most said 48%.
The real figure is a 162%.
We see this as a wake-up call,” said Grant Bazian, CEO of MNP. “One must be aware of the magnitude of the situation in order to address it. This survey exposes the magnitude of Canada’s personal debt situation.”
Younger Canadians between the ages of 18-34 are most likely (34%) to be insolvent, ahead of 35-54 year olds (20%) and seniors (10%) according to the survey. Other notably insolvent groups include renters (30%) and parents (29%).
Other survey findings include:
- One in five (17%) of homeowners are willing to take out a home equity line of credit to finance a large purchase or expense;
- An equal proportion (17%) would be likely to take out a non-home equity line of credit to take advantage of lower interest rates;
- One in 10 of homeowners would be likely to switch from a fixed mortgage plan to a variable rate plan.