Manulife Bank - Homeowner Debt Survey

Spring 2015

1

Highlights

Canadian homeowners are taking – or willing to take – concrete steps to become debt free sooner:

Debt-freedom is a high priority for 78% of homeowners

56% of respondents have reduced their debt in the last year compared to only 51% the previous year

Approximately four in 10 homeowners made extra mortgage payments during the past year. Average additional payment = $6,300

79% said they'd be willing to cut back on discretionary spending, such as daily coffees and dining out, to become debt free sooner

Yet, debt remains a concern for many:

On average, homeowners who have a mortgage report an average of $190,000 in mortgage debt

If a primary wage earner lost their job: 27% of mortgage holders said they’d struggle to make their regular mortgage payment within three months. An additional one in six would struggle within just one month

If debt free tomorrow, 70% would direct at least some of the extra money to savings, suggesting many must choose between paying off debt and saving for their future

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Debt-freedom is a constant priority for the vast majority of Canadian homeowners

3

On a scale of 1-10, where does becoming or being debt-free

rank as a financial priority, where 1 means it’s not a priority

and 10 means it’s your top financial priority?

78% 79% 80% 78%

60%

70%

80%

90%

2013 Q3 2014 Q1 2014 Q3 2015 Q1

Top priority (rating 8-10)

Base: All respondents (n=2372)

35% 20% 23% 12% 4% 3%

Top priority 10 9 8 7 6 5 4 3 2 Not a priority 1

High priority to be debt free

(Top 3 box)

78%

Moderate priority

(Rating 5-7)

19%

Low priority

(Rating 1-4)

3%

Net reduced debt is trending higher while increased total debt is down from recent years

4

When you think about how your debt has changed over the past 12 months, would you say you’ve:

NET: Reduced debt

Spring 2015: 56%

Fall 2014: 49 %

Spring 2014: 51%

10%

20%

30%

40%

50%

60%

70%

2013 Q3 2014 Q1 2014 Q3 2015 Q1

Tracking Change in Debt

Reduced debt Increased debt

10%

17%

24%

14%

22%

13%

7%

20%

22%

17%

23%

11%

9%

22%

24%

15%

20%

9%

Reduced debt by morethan expected

Reduced debt, but lessthan expected

Reduced debt byamount expected

No change

Increased total debt

No debt during past 12months

Spring 2015

Fall 2014

Spring 2014Base: All respondent s (n=2372)

Yes made extra lump

sum payment: 18%

Yes increased regular

payment: 17%

Yes made extra lump

sum payment AND increased regular

payment: 5%

No 60%

40% of mortgage holders made extra mortgage payments in the past year with an average of $6,300

Base: All mortgage holders (n=1765)

5

Did you make any extra payments and/or increase the amount of your regular payments toward your mortgage in the past year, beyond what was required by your lender?

21%

39%

20%

11%

5% 4%

Between $1and $1,000

Between$1,001 and

$5,000

Between$5001 and

$10,000

Between$10,001

and$25,000

More than$25,000

Don'tknow/not

sure

Total Amount of Extra Mortgage Payments

Average amount:

$6,300

Base: All mortgage holders who made extra payment in the past year (n=745)

2%

4%

13%

16%

16%

22%

61%

I don’t know how much extra money my lender would allow me

to put toward my mortgage

It wasn’t convenient

I‘ve got a low rate on my mortgage so it doesn’t make sense to make

extra payments

I didn’t want to lose access to the money in case I needed it for

something else

I made extra payments towardsother debts instead

Other spending priorities came up

I didn't have any extra money

Why not?

“No extra money” and “other spending priorities” are top reasons mortgage holders did not make extra payments

Base: All mortgage holders who didn’t make additional payment in the past year (n=1020)

6

Why didn’t you make extra payments in the past year?

Yes made extra lump

sum payment: 18%

Yes increased regular

payment:17%

Yes made extra lump

sum payment AND increased regular

payment: 5%

No 60%

Please indicate how much mortgage debt you currently have outstanding.

Homeowners in Alberta and B.C. reported the largest mortgage debt

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$217,600

$242,400

$197,100 $193,000

$159,400

$127,600

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

BC AB SK/MB ON QC ATL

Average mortgage

debt in Canada -

$190,000

Mortgage Debt

Base: All respondents with mortgage debt

8%

12%

14%

19%

27%

16%

My mortgage allows me to easilychange my payments as needed

More than a year

Between six months and a year

Between three and six months

Between one and three months

One month or less

Traditional mortgages have a fixed mortgage payment that must be made monthly, semi-monthly or weekly. If the primary income-earner in your household were to become unemployed, how long would it take before you would have difficulty making your regular mortgage payment?

Over 40% of mortgage holders indicated that if the primary income-earner lost their job, it would take no more than three months before they’d have difficulty making their regular mortgage payment

Base: all mortgage holders (n=1765)

8

Total 3 months

or less:

43%

Almost half of mortgage holders indicated they couldn’t manage up to 10% increase of their mortgage payment

9

Assuming interest rates are higher next time you renew your mortgage, how much could your mortgage payment increase before it would cause you financial difficulty? I could comfortably manage an increase in my mortgage payment of:

15%

34%

21%

11%

4% 4%

Zero. Anyincrease would

cause me financialdifficulty.

Up to 10% morethan I'm paying

now

Up to 20% morethan I'm paying

now

Up to 30% morethan I'm paying

now

Up to 50% morethan I'm paying

now

More than 50%more than I'mpaying now

Base: All mortgage holders (n=1765)

Total 0-10%: 49%

Total over 20% more: 19%

27%

29%

29%

30%

41%

57%

38%

33%

40%

32%

43%

32%

33%

38%

32%

35%

16%

11%

THE AMOUNT YOU’VE SAVED FOR RETIREMENT

THE AMOUNT OF EMERGENCY/RAINY-DAY SAVINGS YOU’VE SET ASIDE

THE AMOUNT YOU HAVE AVAILABLE FORDISCRETIONARY SPENDING

THE AMOUNT OF DEBT YOU CURRENTLY HAVE

THE AMOUNT OF YOUR HOUSEHOLD INCOME

YOUR ABILITY TO MANAGE DAY-TO-DAYEXPENSES

Satisfied (Top 3 box) 5-7 Unsatisfied (Bottom 4 box)

On a scale of 1-10, how satisfied are you with your current financial situation with regards to each of the following financial needs?

Base: all respondents(n=2372)

Canadians are most satisfied with their ability to manage daily spending and least satisfied with their retirement and rainy-day savings

10

Over 7 in 10 homeowners would save for retirement if their debt was paid off tomorrow, followed by vacation and home renovation

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4%

11%

15%

17%

20%

27%

44%

55%

71%

Other

Consumer goods

Entertainment/diningout

Vehicle

Education savings

Other savings

Home renovation

Vacation

Retirement savings

If your debt was paid off tomorrow, what would you do with the extra money each month?

Base: all with debt (n=2175)

21%

20%

25%

28%

29%

35%

38%

39%

42%

42%

None of the above

Phone/internet/cable services

Recreation/education/reading

Vacations / travel

Clothing/footwear

Charitable donation

Household furnishings / appliances

Entertainment (movies, concerts, sporting events)

Daily coffee and/or snacks

Dining out

Of the following would you be willing to cut back on if it would help you become debt-free sooner?

Base: all with debt(n=2175)

Dining out and daily coffee are the things Canadian homeowners most likely to cut back on if it would help them to become debt-free sooner

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% of Top 3 box (8-10) would be willing to cut back on

Only one in five are unwilling

to cut back on any of these

expenses

Research methodology an objective

The Manulife Bank Homeowner Debt Survey is conducted twice a year. The objective of the

Spring 2015 survey is to explore Canadian homeowners’ attitudes and actions towards

becoming debt free.

Research House conducted the online survey with 2,372 Canadian homeowners between

February 10th -27th, 2015.

Target audience:

20 – 59 years of age

Annual household income $50,000+

Homeowners

National results are weighted

by province, income and age

Regional and age differences are presented in the

next slide.

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22%

42%

59%

67% 72% 75% 77% 78%

20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59

Homeownership by Age*

Can avg.

68%

*Source: Statistic Canada Census of Population, 2006

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Respondent profile (un-weighted data)

Province* %

Atlantic Canada (n=215) 9%

Quebec (n=546) 23%

Ontario (n=867) 37%

Manitoba/Saskatchewan (n=216) 9%

Alberta (n=230) 10%

British Columbia (n=298) 13%

Total (n=2,372) 100%

Age %

20-29 years (n=250) 11%

30-39 years (n=706) 30%

40-49 years (n= 707) 30%

50-59 years (n= 709) 30%

Total (n=2,372) 100%

Note: Oversampled in Atlantic Canada and Manitoba/Saskatchewan to allow for regional reporting

Percentages may not total 100 due to rounding

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