News

The Value of Homeownership is Still Worth the Wait

TORONTO, April 8, 2014 /CNW/ – According to a national survey commissioned by Genworth Canada, homebuyers are working harder and longer to save for a down payment and remain confident in the long-term benefits of buying a home. The annual poll, completed in conjunction with the Canadian Association of Credit Counselling Services (CACCS), asked 1,507 Canadians questions about their financial well-being and preparedness.

“Despite tighter mortgage qualification criteria over recent years, survey results point towards positive trends in homebuyer behaviour,” said Stuart Levings, Chief Operating Officer of Genworth Canada. “With a stable economy and real estate market, Canadians appear to have more confidence in the value of homeownership and see their goals of homeownership and financial well-being as more achievable.”

Highlights

Homebuyers are thinking more about smart home investing

  • 17 per cent say now would be a good time to buy a home, with a slightly higher proportion among First-Time Buyers/Intenders (19 per cent )
  • Up since 2013, two-thirds of respondents (64 per cent versus 58 per cent) feel that housing prices will increase in the next 12 months
  • Half expect to take 1-2 years to save for their down payment, with an increasing number (29 per cent versus 21 per cent) saying it will take 3-4 years
  • 53 percent are worried they might miss the perfect house because they don’t have enough saved for the down payment
  • 67 per cent say their goal is to pay off their mortgage faster, up from 62 per cent in 2013

Homeownership is a valuable asset both financially and emotionally

  • Nine out of ten people agreed that owning their own home gave them a greater sense of emotional well-being
  • Nine out of ten people thought homeownership may mean more work and effort, but would rather own their home than rent

Canadians’ financial well-being is strengthening as they become more fiscally responsible

  • 48 per cent of respondents believe they are in good or great shape, up from 44 per cent in 2013
  • Up slightly from 2013, 38 per cent say they were able to save money in the past year and 51 per cent say they pay their credit cards in full each month
  • The proportion of First-Time Buyers/Intenders who say they don’t know what their credit rating is has declined from 32 percent to 23 per cent

Financial literacy attitudes stay consistently strong over the last two years

  • 95 per cent agree that children should be taught basic finances and budgeting in school
  • 93 per cent would like to see education provided before people take out their first loan or credit card

“It is encouraging to see Canadians taking a more proactive stance on managing debt and savings,” said Henrietta Ross, CEO of CACCS. “Credit counseling is a great way to ensure that your goals are viable and that all potential risks have been taken into consideration, and being aware of your financial fitness score is an important first step in that process.”

Get Financially Fit, Learn More
To help get Canadians thinking about their financial well-being, Genworth and CACCS are launching a mobile version of the Financial Fitness Score tool.  The first of its kind when the online version launched in 2011, the tool helps people determine how well they are managing their finances and provides useful information that is based on their financial fitness level. The re-launched version now allows consumers to access the tool from any mobile device or platform.  To find out your Financial Fitness Score visit www.financialfitness.ca.

Interviews for the poll were conducted by Environics Research Group using an online methodology during the week ofFebruary 7-14, 2014.  David MacDonald, Vice President at Environics Research Group, presented the results of the survey at Genworth Canada’s Homeownership Education Week seminar for mortgage industry professionals on April 8, 2014.  Following the presentation of the survey results, MacDonald was joined by Henrietta Ross, CEO of CACCS,Stuart Levings, COO of Genworth Canada, and Laura Leyser of ReMax Canada in a panel discussion moderated byTara Perkins, real estate reporter for the Globe & Mail.  To view a replay of the live video webcast of the seminar, visitwww.genworth.ca.

About Genworth Canada
Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For almost two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at December 31, 2013, Genworth Canada had $5.7 billion total assets and $3.1 billionshareholders’ equity. Find out more at www.genworth.ca.

About Canadian Association of Credit Counselling Services
The Canadian Association of Credit Counselling Services (CACCS) represents a Canada-wide network of accredited, not-for-profit agencies and affiliates offering preventative education and confidential services to clients experiencing financial difficulties. With a focus on financial counselling education, accreditation of agencies and certification of Financial Counsellors, CACCS is also committed to national research and policy initiatives concerning personal finance and industry advocacy.

To find a certified Credit Counsellor and qualified Financial Coach at an accredited Member Agency, visitwww.caccs.ca for more information.

SOURCE Genworth Canada

PDF available at: http://stream1.newswire.ca/media/2014/04/08/20140408_C8908_DOC_EN_38908.pdf

 For further information:

For additional information or to arrange interviews, please contact: 
Lisa Azzuolo
Genworth Canada
905.287.5520 or Lisa.Azzuolo@genworth.com

 

Press Release available on CNW:  http://www.newswire.ca/en/story/1335957/the-value-of-homeownership-is-still-worth-the-wait 

Seniors face crisis as they live longer, but stay indebted

By:  Building Wealth, Published on Sat Aug 31 2013

We appear to have embarked on a slow motion crisis which could end in financial disaster for thousands of seniors.

Two recent developments have confirmed the seriousness of the situation. The first was the release of draft mortality table for pension plans by the Canadian Institute of Actuaries (CIA) which came to the startling conclusion that we can all expect to live almost three years longer than had previously been believed.

According to the figures, which are based on Canadian data for the first time (the Institute previously used U.S. statistics) we aren’t dying anywhere near as fast as the number-crunchers had believed. As a result, the average 60-year old woman can expect to live an additional 2.7 years, which would take her into her 90th year. The average man of the same age gets an additional 2.9 years, which would take him past his 88th birthday.

That should be good news. The problem is whether there will be enough money available to pay for those extra years. If the new tables are adopted (the CIA is accepting comments until Sept. 30), pension plans are going to have to make some significant adjustments which consulting firm Towers Watson estimates will add between 5 per cent and 10 per cent to their liabilities immediately. That can only be paid for in two ways: either contributions will have to increase or benefits will have to be cut.

The second shoe dropped last week with the release of a report on the nation’s credit status by Equifax Canada, a leading credit rating agency. It found that the debt levels for people over 65 had jumped 6.5 per cent year-over-year, the largest increase for any age group.

So here’s the picture. We’re living longer and increasingly we’re going into debt to pay for it, just at a time when interest rates are starting to rise. That can only spell trouble down the road.

Jeffrey Schwartz of Consolidated Credit Counseling Services of Canada told The Canadian Press that he believes one of the main reasons why seniors are adding to their debt load so quickly is a desire to maintain their pre-retirement lifestyle. They haven’t saved enough so they’re borrowing to pay for it.

That rings true. The baby boomers, who are now hitting retirement age, are the most consumption-oriented generation in history. By refining credit to a fine art and cutting savings to the bone, they were able to finance a lifestyle that was far more lavish than anything their parents could imagine. Now that they’re retiring, they don’t want to let go. They’ve lived with debt all their lives and they figure this is just more of the same.

They’re in for a shock. As interest rates move higher, the cost of carrying their debts is going to soar, putting a huge strain on their fixed income. If they live long enough – which the new mortality tables suggest they will – they’re going to hit a wall at some point. A $100,000 line of credit at prime plus a half per cent costs $3,500 to service today, interest only. If prime rises to 5 per cent, which could happen within a couple of years, the interest cost will jump 57 per cent, to $5,500 annually. Where will that extra money come from? At some point, the ability to borrow more will run out.

What’s the answer? The common sense approach is to tell these folks to live within their means — don’t spend what you don’t have. But gearing down a lifestyle that you’ve taken for granted for many years isn’t easy.

Unless you have a gold-plated pension plan, one solution is to plan to work longer. Make 70 the new 65. By remaining in the workforce, you can increase your retirement savings and decrease the number of years you have to depend on that money to live.

Many people have already reached that conclusion. Studies show that an increasing number of Canadians believe they will have to work past the normal retirement age because they haven’t saved enough. It’s a hard reality to face – but it’s better than running out of money before you run out of years.

Gordon Pape is editor and publisher of the Internet Wealth Builder newsletter. His website is www.BuildingWealth.ca

Source:  http://www.thestar.com/business/personal_finance/investing/2013/08/31/seniors_face_crisis_as_they_live_longer_but_stay_indebted.html

Canadian consumer debt rises to $27,000: TransUnion

The average Canadian had $27,131 of consumer debt in the second quarter, a new study suggests.

That’s $910 higher compared to the same period last year, when the average Canadian had consumer debt of $26,221.

It is also nearly $200 higher than the first quarter of 2013, when consumer debt unexpectedly decreased for the first time in more than two years, according to the TransUnion study.

TransUnion said the year-over-year increase for the period ended June 30 was much higher than in the previous two years, and does not include mortgage debt.

The highest average consumer debt was $37,879 in British Columbia, while the lowest average debt was $18,580 in Quebec.

The credit bureau said it expects total debt to continue to grow throughout the rest of the year.

“After the unexpected first quarter decrease in consumer debt, the variable climbed back up in the second quarter with a larger than normal rise,” said Thomas Higgins, TransUnion’s vice-president of analytics and decision services.

“This points to Canadian consumers’ continued appetite for credit as an instrument to make purchases.”

Meanwhile, a report from Equifax Canada released on Monday said total consumer debt in Canada rose $77 billion, or 6.1 per cent, in the second quarter of 2013 from last year, and by 6.5 per cent among those 65 and over.

Source:  http://www.thestar.com/business/2013/08/28/canadian_consumer_debt_rises_to_27000_transunion.html

Seniors acquiring more debt, report says

Canadian consumers continued to increase their debt burdens, but consumers 65 and older had the greatest increase since last year, according to Equifax.

By:  News reporter, Published on Mon Aug 26 2013

Traditional “golden years” could be becoming rarer for older Canadian consumers as their debt loads rise, according to a new report.

Canadian consumers of all ages continued to increase their debt burden, said Equifax Canada’s second-quarter report, released on Monday. Total debt rose by nearly $77 billion, or 6.1 per cent, compared with the same time last year.

But consumers 65 and older had the greatest year-over-year increase, at 6.5 per cent, according to the credit-monitoring company.

“The traditional golden years that retirees anticipated have not become a reality as debt loads rise for those over 65,” said Henrietta Ross, CEO of Credit Counselling Services, in a statement.

“With reduced incomes, often coupled with increased expenses, these individuals are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle that they may no longer be able to afford.”

She said seniors may be taking on debt to help their own parents or grown children, who may be struggling financially themselves.

Despite efforts from regulators to tighten lending standards, debt has increased across all age groups, partially driven by a 7.4 per cent increase in outstanding mortgage debt since last year, the report states. Auto loan balances have also increased 8.6 per cent, according to the report.

An increased demand for credit outside of mortgages is positive for the economy in the short term, Cristian deRitis, Moody’s Analytics senior director of Consumer Credit Economics, said in a statement. But, he warned, that increased demand “could limit the ability of overextended consumers to react to any financial bumps in the road in the future.”

Equifax’s report also found the national 90-day-plus delinquency rate decreased over the past three years, to a record low of 1.19 per cent.

Toronto has the highest delinquency rate out of major metropolitan areas, at 1.56 per cent of non-mortgage balances. But that’s an improvement since the city’s peak of 2.53 per cent in 2010, according to the report.

“Stable home prices and improvements in the labour market should continue to support the market in the future, while the outlook for consumer credit remains positive,” deRitis said. “A sudden rise in interest rates or deterioration in fundamentals in key export markets are risks to this forecast, however.”

While fears of another recession subside, consumers are continuing to accumulate high levels of debt, but with more fiscal responsibility, said Regina Malina, Equifax director of modelling and analytics.

The 90-day-plus delinquency rate for mortgages decreased 19.2 per cent from this time last year. Equifax noted that could be because of tighter mortgage lending rules introduced last summer.

Average mortgage balances have increased to $168,387 this year from $162,985 during the second quarter of last year.

Source:  http://www.thestar.com/business/personal_finance/spending_saving/2013/08/26/seniors_acquiring_more_debt_report.html

National Average Delinquency Rate at Record Lows While Seniors Acquire More Debt-Equifax Canada Reports

TORONTO, ONTARIO–(Marketwired – Aug. 26, 2013) - Equifax Canada’s Q2 2013 National Consumer Credit Trends Report finds that the National 90 day-plus delinquency rate decreased over the past three years in Canada, to a record low of 1.19 per cent.

But Canadian consumers continue to increase their debt burdens according to data from Equifax Canada, despite recent efforts from regulators to tighten lending standards. Total debt rose by nearly $77 billion, or 6.1 per cent, from last year’s level driven by an 8.6 per cent increase in auto loan balances and a 7.4 per cent increase in outstanding mortgage debt.

Cristian deRitis, Senior Director of Consumer Credit Economics at Moody’s Analytics, commented on the Equifax report by adding that “the increased demand for credit outside of mortgages is positive for the economy in the short-term, but could limit the ability of over-extended consumers to react to any financial bumps in the road in the future.”

The Equifax Report also revealed that average debt for consumers aged 65 and over shows the greatest year-over-year increase in all age groups at 6.5 per cent.

Henrietta Ross, CEO, Canadian Association of Credit Counselling Services, noted that “the traditional golden years that retirees anticipated have not become a reality as debt loads rise for those over 65. With reduced incomes, often coupled with increased expenses, these individuals are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle that they may no longer be able to afford. They also may be accumulating debt in an effort to help their own grown children or their own parents who are struggling financially,” she added on this alarming trend.

Serious delinquency rates are stable across lending products as well as provinces. Toronto has the highest delinquency rate among major Metropolitan Areas at 1.56 per cent of non-mortgage balances but has continuously improved since hitting a peak of 2.53 per cent in 2010. The fraction of mortgage loans that were 90 or more days delinquent fell to 0.27 per cent in the second quarter from 0.33 per cent a year ago.

“Stable home prices and improvements in the labour market should continue to support the market in the future, while the outlook for consumer credit remains positive,” advised deRitis. “A sudden rise in interest rates or deterioration in fundamentals in key export markets are risks to this forecast however.”

For more detail, please click here.

Regina Malina, Director, Modeling & Analytics, Equifax Canada, commented that “as the fears of another recession slowly subside, consumers continue to accumulate high levels of debt but with more fiscal responsibility.”

The Equifax Report now contains mortgage debt and delinquency trends.

Mortgage portfolio highlights include:

  • The 90 day plus delinquency rate for mortgages shows a 19.2 per cent decrease from the same period last year, which could be the result of the tighter mortgage lending rules introduced in July 2012.
  • Mortgage portfolios are growing at a robust pace, an increase of 7.4 per cent over the same period last year.
  • Average Mortgage balances are showing small but steady increases: $162,985 vs. $168,387 (Q2/12 vs. Q2/13 respectively).

About Equifax

Equifax is a global leader in consumer and commercial information solutions, providing businesses of all sizes and consumers with information they can trust. We organize and assimilate data on more than 500 million consumers and 81 million businesses worldwide, and use advanced analytics and proprietary technology to create and deliver customized insights that enrich both the performance of businesses and the lives of consumers.

Headquartered in Atlanta, Equifax operates or has investments in 18 countries and is a member of Standard & Poor’s (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. For more information, please visit www.equifax.com.

 

Contact Information

Source:  http://www.marketwire.com/press-release/national-average-delinquency-rate-record-lows-while-seniors-acquire-more-debt-equifax-nyse-efx-1824156.htm

Bankruptcies down, but more Canadians negotiating way out of debt: report

Globe and Mail

Andy Fisher hardly has to explain what a consumer proposal is any more.

These days, most people who see the Toronto-based bankruptcy trustee are not interested in talking about bankruptcy, which might be a sign of optimism in the economy, Mr. Fisher said. Most people want to talk to him instead about a consumer proposal – an option that is overtaking personal bankruptcy in Canadian insolvency cases.

Click here to continue reading on The Globe and Mail…

More Canadians in debt, making lower monthly payments poll finds

By: Linda Nguyen The Canadian Press, Published on Wed Jul 24 2013

A new poll suggests that more Canadians are in debt this year and taking longer to settle their accounts.

The study released Wednesday by the Bank of Montreal (TSX:BMO) found that 83 per cent of Canadians surveyed admit to having some form of debt, an increase from 74 per cent a year earlier.

But the poll also found that the average amount of monthly debt repayment has fallen by 13 per cent from a national average of $1,138 to $986. Regionally, those in Alberta had the highest amount of debt payments each month at $1,225, while those who live in Quebec reported the least amount at $768.  …to continue reading click here.

Consumers who use Credit Counselling services outperform average Canadians

TORONTO, July 8, 2013 /CNW/ – The efficacy of Canada’s not-for-profit credit counselling services industry is indisputably positive. “Based on credit bureau research involving debt-ridden consumers aided by our services, there can be no doubt that not-for-profit credit counselling is good for Canadian households and is beneficial to our national economy. We now have hard data showing that our time-honoured credit counselling services provide superior, trustworthy ways for Canadians to beat bad debt and regain strong and balanced financial footing,” said Henrietta Ross, CEO of the Canadian Association of Credit Counselling Services (CACCS).

According to research findings, previously overindebted individuals who successfully complete a voluntary credit counselling Debt Management Program (DMP) become far more credit risk-friendly. “Equifax Canada analysis shows that consumers who have successfully completed a Credit Counselling Program through an accredited not-for-profit agency demonstrate a significantly improved credit score and lower delinquency rates compared with average Canadian consumers,” says Paul Le Fevre, Director, Operations, Equifax Canada.

The research data included more than 1,600 Canadian consumers who completed a credit counselling DMP in 2010, and whose credit worthiness was subsequently analyzed at year’s end in both 2011 and 2012. The research was informed by the Equifax Consumer Risk Predictor score (CRP), a risk assessment tool based on more than 400 consumer credit file attributes and that predicts the likelihood of 90-day past due credit delinquency within the next 24 months. As part of their lending criteria, credit grantors can use this type of score to assess a consumer’s credit risk. Low scores, below 500, indicate unsafe risk due to very serious credit issues while mid-range scores between 575-649 reflect an above average risk profile, the safest risks for lenders ranging from 750-900.

Prior to completing the credit counselling DMP, consumers in the control group reflected mostly high risk scores of below 560. But after completing the DMP – and by the end of 2011 – consumers significantly upped their CRP average to 627 (indicating an above average risk profile) and their credit performance continued to improve reaching 636 at the end of 2012. Consumers who repay their debt using a DMP are almost two times better – practically doubling the odds – in relation to being a good credit risk when compared to Canadians who did not use credit counselling services.

Ross went on to say, “This study shows that individuals and families want to improve their financial management skills – they want to learn how to manage their money better. CACCS members help them do exactly that – whether through DMP’s or the extensive financial education programs we provide nation wide, while working in league with financial institutions, local schools and communities, the provinces, and the federal government”. She further emphasized that “By helping Canadians reinvent themselves financially, consumers can benefit from a healthier lending environment in Canada.”

About the Canadian Association of Credit Counselling Services:

The Canadian Association of Credit Counselling Services (CACCS) sets the standard for the not-for-profit financial counselling industry. CACCS members provide Canadians with unbiased and confidential services that include education about the fundamentals of money management and budgeting, personal financial assessments and help to find solutions to indebtedness and money problems. CACCS is also committed to national research and policy initiatives concerning personal finance and industry advocacy.  Visit www.caccs.ca for more information.

For further information:

Henrietta Ross 905 945-5644 ext. 222 hross@caccs.ca

 

Click here to access the press release located on Canada Newswire. 
http://www.newswire.ca/en/story/1195591/consumers-who-use-credit-counselling-services-outperform-average-canadians

Should you cancel your credit card?

A friend has accumulated many, many credit cards over the years. She admits she signed up for some of them just to get the store discounts, never planning to use the cards for long. With so many pieces of plastic weighing down her wallet and so many monthly statements coming in, she wants to streamline and cancel all but one. But should she?

“This is a really common question when I go out in the field,” says Paul Le Fevre, director of operations at Equifax Canada Co., one of two national credit bureaus. (The other is TransUnion Canada, which didn’t respond to an interview request.) “It depends on consumer’s circumstances at the time.”  Click here to continue reading…