Canada Attitudes towards Debt Market Report 2020
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Description
Everything you need to make the right decisions
Providing the most comprehensive and up-to-date information and analysis of the Attitudes Towards Debt – Canada market including the behaviours, preferences and habits of the consumer.
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What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?
Covered in this report
Fuelled by a prolonged low interest rate environment, Canadians now hold $2.3 trillion of household debt. The economic fallout of the COVID-19 pandemic is likely to result in more households having difficulty in meeting their debt obligations. The massive wave of support programs rolled out by governments across the country seem to have provided much-needed financial relief to many Canadians, while lenders have also extended a hand through relief measures. In March, the Bank of Canada reduced the policy interest rate by 150 basis points to help ease borrowing costs.
Expert analysis from a specialist in the field
Written by Sanjay Sharma, a leading analyst in the Financial Services sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.
Government support programs and, to a lesser extent, financial relief measures offered by lenders have provided a much-needed financial lifeline to Canadians requiring support due to the economic shock effects of the pandemic
Sanjay Sharma
Financial Services Analyst
Table of Contents
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Overview
- What you need to know
- Key issues covered in this Report
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Executive Summary
- Top takeaways
- Market overview
- Impact of COVID-19 on debt attitudes
- Figure 1: Short, medium and longer-term impact of COVID-19 on attitudes towards debt, October 2020
- Opportunities and Challenges
- Household debt is a challenge for vulnerable households
- Debt has the least impact on over-55s
- Debt has a significantly greater impact on younger Canadians
- COVID-19 has worsened the financial situation of almost half of borrowers
- Around three in four 18-34s believe apps can help manage finances better
- COVID-19 has helped shift some focus to mental health and debt
- COVID-19 spurs BNPL
- Around three in five parents with young children have unsecured debt
- Next normal for lenders
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The Market – Key Takeaways
- Economic impact of COVID-19
- CMHC tightens lending standards for home buyers
- New benefits as CERB ends
- Mortgage deferrals also help contain delinquencies
- Credit scoring gets an upgrade
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Market Factors
- Impact of COVID-19 on debt attitudes
- Figure 2: Short, medium and longer-term impact of COVID-19 on attitudes towards debt, October 2020
- Economic impact of COVID-19
- Temporary spike in household savings rate
- CMHC tightens lending standards for home buyers
- New benefits as CERB ends
- Mortgage deferrals also help contain delinquencies
- Impact of COVID-19 on debt attitudes
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Market Opportunities
- COVID-19 mortgage and loan relief measures
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- Figure 3: Cumulative number of deferrals approved, as of September 4, 2020
- Credit scoring gets an upgrade
- Quebec considers making credit reports free
- Fintech challengers
- Brim Financial
- Figure 4: Brim Financial Instagram post, April 2020
- Other challengers
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Companies and Brands – Key Takeaways
- BNPL takes off
- Mogo launches prepaid Visa with automatic carbon offsets
- A ‘Boost’ to help get ahead of your bills
- COVID-19 impact on marketing campaigns
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Competitive Strategies
- Buy now, pay later
- COVID-19 spurs BNPL
- Afterpay comes to Canada
- Sezzle enters the Canadian market
- Klarna becomes Europe’s biggest fintech unicorn
- Visa Installments pilots in the US
- Apple introduces instalment pay plans (US)
- Splitit partners with MasterCard to expand BNPL
- Citi introduces buy now, pay later for Amazon purchases in the US
- Buy now, pay later advertisers bet on Instagram
- Figure 5: Afterpay: Sarah Hyland Instagram post, February 2020
- Debt management apps can help some borrowers
- Splitwise
- epost
- Debt Manager
- Canadian Mortgage app
- Debt planner pay-off
- PocketGuard
- Wellspent helps users “Tinder” their spending
- Figure 6: Wellspent | Reflection | Basic, June 2019
- Mogo launches prepaid Visa with automatic carbon offsets
- A ‘Boost’ to help get ahead of your bills
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Marketing Campaigns
- HomeEquity shows what to love about staying home
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- Figure 7: Home is Everything – Live in the Home You Love, April 2020
- HomeEquity Bank’s new campaign to fight fraud
- Figure 8: Catch the scam: the grandparent scam, August 2020
- Borrowell reaches out to customers to help them with financial stress
- Figure 9: Borrowell email campaign on managing financial stress, April 2020
- COVID-19 impact on marketing campaigns
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The Consumer – Key Takeaways
- Around half of Canadians have secured and unsecured debt
- Around half of borrowers are comfortable with their debt levels
- COVID-19 has worsened the financial situation of almost half of borrowers
- Debt has a significantly greater impact on younger Canadians
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Debt Ownership
- Nearly half owe less than $50,000
- Figure 10: Amount of debt held, July 2020
- Around half of Canadians have secured debt
- Figure 11: Secured debt ownership, July 2020
- Ownership is higher among 35-54s
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- Figure 12: Secured debt ownership (select), by age, July 2020
- Credit card is the most common type of unsecured debt
- Figure 13: Unsecured debt ownership, July 2020
- Ownership declines with age, while increasing among financially vulnerable
- Growing student debt is a concern
- Figure 14: Unsecured debt ownership (select), by age, July 2020
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- Figure 15: Unsecured debt ownership (select), by current financial situation, July 2020
- Some types of unsecured debt can be dangerous
- Around three in five parents with young children have unsecured debt
- Figure 16: Moka Instagram post, July 2020
- Nearly half owe less than $50,000
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Debt Management
- Around half of borrowers are comfortable with their debt levels
- Figure 17: Debt management, July 2020
- Current financial situation has a major influence on debt management
- Figure 18: Debt management (select), by current financial situation, July 2020
- Men are more confident and comfortable with debt
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- Figure 19: Debt management (select), by gender, July 2020
- A third have recently cut spending to pay down debt
- Figure 20: Debt payment behaviours, July 2020
- Debt has the least impact on over-55s
- Figure 21: Debt payment behaviours, 18-54s vs over-55s, July 2020
- Around half of borrowers are comfortable with their debt levels
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Managing Finances
- COVID-19 has worsened the financial situation of many
- Figure 22: Managing finances, July 2020
- Around three in four 18-34s believe apps can help manage finances better
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- Figure 23: Managing finances, by age, July 2020
- Is impulsive spending a factor in worsening financial health?
- Figure 24: Managing finances (select), by current financial situation, July 2020
- Around one in five men have borrowed to invest in the stock market
- Figure 25: Managing finances (select), by gender, July 2020
- COVID-19 has worsened the financial situation of many
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Debt Attitudes
- A third have more debt due to the pandemic
- Figure 26: Debt attitudes, July 2020
- Debt has a significantly greater impact on younger Canadians
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- Figure 27: Debt attitudes (select), 18-44s vs over-45s, July 2020
- COVID-19 has helped shift some focus to mental health and debt
- Gender differences emerge
- Figure 28: Debt attitudes (select) – over-55s, by gender, July 2020
- Younger consumers and ethnic minorities have more debt as a result of COVID-19
- Figure 29: Impact of COVID-19 on debt, by age, July 2020
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- Figure 30: Impact of COVID-19 on debt, by ethnicity and race, July 2020
- Weaker financial situation increases vulnerability
- Figure 31: Debt attitudes (select), by current financial situation, July 2020
- A third have more debt due to the pandemic
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Appendix – Data Sources and Abbreviations
- Data sources
- Consumer survey data
- Abbreviations and terms
About the report
This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.
Market
Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.
Consumer
Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.
Brand/Company
Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.
Data
Market reports provide appendices of data to support the research and insight produced. Our tables of data are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.
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