Description

“The current housing boom across Canada has resulted in record mortgage and consumer lending growth; as the strongest players, the big banks have made record profits as new home buyers struggle to buy their first homes. A supply/demand imbalance in housing means that the situation is unlikely to resolve in the near future although higher interest rates and proactive government initiatives could put the brakes on the surging market.”
– Sanjay Sharma, Senior Financial Services Analyst

This Report looks at the following areas:

  • The impact of COVID-19 on consumer lending.
  • Consumer behaviours and attitudes related to lending—what is the level of interest and need for these products, ownership of secured and unsecured debt products, how do consumers choose a lender, attitudes towards debt & borrowing, purpose of loans, etc.

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
      • Executive Summary

          • Top takeaways
            • Market overview
              • Impact of COVID-19 on consumer lending
                • Figure 1: Short-, medium- and longer-term impact of COVID-19 on consumer lending, October 2021
              • Opportunities
                • Branch networks are advantageous to personal loan customer acquisition
                  • Younger consumers more comfortable with Fintech lenders
                    • Crypto-lending likely to become more popular
                      • Majority believe that mortgage brokers can get better rates
                        • South Asian Canadians are more active on the mortgage front
                          • Challenges
                            • Major concerns about housing affordability for first-time buyers
                              • Reverse mortgages have a perception issue
                              • The Market – Key Takeaways

                                • Mortgage debt rises to record levels
                                  • HELOC balances increase while unsecured lines of credit decline
                                    • Housing affordability in a major concern
                                      • Canada has an aging population, boosting home equity products
                                      • Market Factors

                                        • Mortgage debt rises to record levels
                                          • HELOC balances increase while unsecured lines of credit decline
                                            • Housing affordability in a major concern
                                              • Working from home boosts housing demand
                                                • Canada has an aging population, boosting home equity products
                                                  • Figure 2: Proportion of 0-14s and over-65s in the Canadian population, 1988-2068*
                                              • Companies and Brands – Key Takeaways

                                                • Mortgage broker news
                                                  • Reverse mortgages
                                                    • Branding campaigns
                                                    • Key Players – Competitive Strategies

                                                      • Mortgage broker news
                                                        • EQ Bank launches “Mortgage Marketplace”
                                                          • MCAP buying Paradigm Quest
                                                            • Neo Financial eyes the mortgage market
                                                              • Reverse mortgages
                                                                • Bloom enters the reverse mortgage market
                                                                  • Figure 3: Bloom Finance Instagram post, September 2021
                                                                • OTPP acquires Home Equity Bank
                                                                • Key Players – Marketing Campaigns

                                                                  • Branding campaigns
                                                                    • CIBC’s new logo 
                                                                        • Figure 4: CIBC Instagram posts in grid formation, September 2021
                                                                      • Coast Capital refreshes its brand
                                                                          • Figure 5: Coast Capital | We’re for real, August 2021
                                                                        • Mogo helps plant trees
                                                                          • Figure 6: Mogo “plant a tree” campaign, September 2021
                                                                        • Questrade launching QuestMortgage
                                                                          • Figure 7: QuestMortgage Email Ad, September 2021
                                                                        • BNPL focus
                                                                          • Scotiabank turns large payments into bite-sized purchases
                                                                            • Figure 8: Scotiabank “Select Pay” ads, September 2021
                                                                        • The Consumer – Key Takeaways

                                                                          • A third of Canadians have a mortgage
                                                                            • Competitive interest rate top factor influencing choice of lender
                                                                              • A quarter of homeowners would consider a reverse mortgage
                                                                                • Strong interest in credit builder loans among younger Canadians
                                                                                • Secured Debt

                                                                                  • A third of Canadians have a mortgage
                                                                                    • Figure 9: Ownership of secured debt, 2021
                                                                                  • Lifestage needs drives ownership higher among 18-54s
                                                                                    • Figure 10: Ownership of secured debt, by age, 2021
                                                                                  • Crypto-lending likely to become more popular
                                                                                    • Figure 11: Ledn Instagram post, June 2021
                                                                                  • Refinancing options for consumers
                                                                                    • South Asian Canadians are more active on the mortgage front
                                                                                      • Figure 12: Mortgage and second mortgage ownership (select), South Asian Canadians vs overall, 2021
                                                                                      • Figure 13: RBC mortgage incentive ad, August 2021
                                                                                  • Unsecured Debt

                                                                                    • Two in five have unsecured debt
                                                                                      • Figure 14: Ownership of unsecured debt, 2021
                                                                                    • Current financial situation strongly correlates with unsecured debt ownership
                                                                                      • Figure 15: Unsecured debt ownership, by current financial situation, 2021
                                                                                    • Age inversely affects ownership
                                                                                        • Figure 16: Unsecured debt ownership, by age, 2021
                                                                                      • Some types of unsecured debt can be dangerous
                                                                                        • How can financial institutions help those financially struggling?
                                                                                          • BNPL is both an opportunity and a threat for credit card companies
                                                                                            • Figure 17: Attitudes towards BNPL, 2021
                                                                                        • Purpose of Loans

                                                                                          • Vehicle purchase is the top reason for obtaining a loan
                                                                                            • Figure 18: Reasons for obtaining a loan, 2021
                                                                                            • Figure 19: Facebook Easyfinancial ad, August 2021
                                                                                          • Payment of day-to-day bills and education are the top reasons for younger borrowers
                                                                                              • Figure 20: Reasons for obtaining a loan (select), 18-44s vs over-45s, 2021
                                                                                            • Current financial situation plays a role in determining loan purpose
                                                                                              • Financially less strong consumers more likely to borrow to refinance…
                                                                                                • …while business and event financing are likelier reasons for those in a stronger financially situation
                                                                                                  • Figure 21: Reasons for obtaining a loan (select), by current financial situation, 2021
                                                                                                • Other borrowing reasons are more age and financial situation neutral
                                                                                                • Choosing a Lender

                                                                                                  • Interest rate is the top choice factor
                                                                                                    • Figure 22: Factors affecting choice of lender (any rank), 2021
                                                                                                  • Two in three over-45s are influenced by interest rate
                                                                                                    • Figure 23: Factors affecting choice of lender (any rank), by age, 2021
                                                                                                  • Existing relationship and preference for regular bank/credit union matter more to older consumers…
                                                                                                    • …consequently, branch networks are advantageous to personal loan customer acquisition
                                                                                                      • Figure 24: Loan attitudes, 2021
                                                                                                    • Younger consumers more comfortable with Fintech lenders
                                                                                                      • Majority of loan consumers rate shop
                                                                                                        • Figure 25: Loan behaviours and attitudes, 2021
                                                                                                        • Figure 26: Attitudes towards loan payments (% agree), by age and gender, 2021
                                                                                                    • Mortgage Attitudes

                                                                                                      • Most consider reverse mortgages as a last resort method of financing
                                                                                                        • Figure 27: Attitudes towards mortgages, 2021
                                                                                                      • Half would prefer online mortgage switching
                                                                                                        • Figure 28: Switching mortgage lenders would be easier if given the option to do so online (% agree), by age and gender, 2021
                                                                                                        • Figure 29: Mogo email ad, June 2021
                                                                                                      • Majority believe that mortgage brokers can get better rates
                                                                                                          • Figure 30: Attitudes towards mortgages, 2021
                                                                                                        • Younger consumers more open to private lenders
                                                                                                        • General Attitudes

                                                                                                          • Major concerns about housing affordability for first-time buyers
                                                                                                            • Figure 31: Attitudes related to housing affordability, 2021
                                                                                                          • Strong interest in credit builder loans among younger Canadians
                                                                                                            • Figure 32: Attitudes towards building credit (% agree), by age and gender, 2021
                                                                                                            • Figure 33: Refresh Financial Instagram post, March 2021
                                                                                                          • Most wary about credit card debt
                                                                                                            • Figure 34: Credit card debt is worse than personal loan debt (% agree), by age, 2021
                                                                                                          • Two in three 18-34-year-old borrowers stressed about their debt levels
                                                                                                            • Figure 35: The amount of debt I owe causes me stress (% agree), by age, 2021
                                                                                                          • Travel rewards lose appeal due to COVID-19
                                                                                                            • Figure 36: Travel rewards credit cards have become less appealing to me (% agree), by age, 2021
                                                                                                            • Figure 37: RBC Avion Facebook ad, August 2021
                                                                                                            • Figure 38: Avion Forgotten Suitcase, August 2021
                                                                                                          • Majority feel guilty about using debt for indulgent purchases
                                                                                                            • Figure 39: General attitudes on consumer lending, 2021
                                                                                                          • Half of consumers prefer dealership financing
                                                                                                          • Appendix – Data Sources and Abbreviations

                                                                                                            • Data sources
                                                                                                              • Consumer survey data
                                                                                                                • Consumer qualitative research
                                                                                                                  • Abbreviations and terms

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