Multiple analyses have indicated that Canadian seniors are among the most active borrowing demographics, but a considerable number of them have in recent months expressed worry for the eventual fate of their home equity.
This is despite the national reverse mortgage load reaching an unprecedented $3.48 billion outstanding in November 2018, roughly 31.68% annually and 1.85% higher on a month-over-month basis.
The latest MNP Consumer Debt Index conducted by Ipsos found that 41% of Canadians are anxious about their current debt levels, and 43% are regretful over the amount of debt that they have taken on in their lives.
“Seniors are usually on a fixed income, meaning a big loan isn’t likely to be paid quickly. At that age, they also aren’t likely to find new additional income streams either. That adds up to borrowers that will rack up interest for a very long time,” Better Dwelling stated in its analysis of the data.
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The OSFI noted that if the borrowing trend among seniors sustains itself, reverse mortgages will only become more popular over the next few years.
A study by TransUnion in Q3 2018 reported that during the first quarter of that year, approximately 63% more Canadians age 73+ borrowed compared to Q1 2017.
For perspective, activity among baby boomers (54-72 years old) increased by only 18% during the same time frame, while borrowing involving millennials and first-time home buyers actually went down, with originations contracting by 19% in the 24-38 age bracket and 22% in the 18-23 segment.
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