MORTGAGE Blog & ARTICLES
Younger Households Currently Having More Debts
No one can deny the fact that the number of younger households is getting higher as years pass by. Given that not much of these households are capable of handling their finances, most of them are suffering from the lack of financial source leading to their last resort, borrowing money. Though other households have their jobs, there are times when their income would shorten because of the growing necessities of the family.
Based on statistics, younger Canadian families are suffering from paying off more debts than older couples. This is the main reason why younger households make the entire process of financial planning tighter than how it supposed to. The fact that they have more debts than their income makes it more difficult for them to think that there is a possible solution for their financial burdens. They find it impossible to pay off debts as they know that their incomes are not enough for paying off the debts and also for meeting the daily necessities of the family.
According to the supporting study for the statistics, households having couples aging 19 to 34 have a total debt that is more than 150% off the supposed pre-tax incomes. This is due to the payments they have to make for their mortgages. More Canadian households are suffering this year than the past years mostly because of the inability to pay off several debts and also in making enough income for the daily household expenses.
The total percentage of debts acquired by younger households is far higher than the total debt of households having couples aging 50 to 64. For these households, the total percentage is around 125% of total earnings. The big difference with the percentage reflects how much burdened younger households are than their counterparts.
In addition to these facts, households nowadays have more than 40% of debts than their incomes. This alone is regarded as a financially risky situation according to the Bank of Canada. For many experts, they always recommend that people should not have a total percentage of debt that is 40% percent higher than what their total income is. It is considered as a very risky level for those who are trying to keep financial worries at bay.
The fact that the levels of debts that Canadian households are higher than the norm makes many economists worried of the possible difficult situations that families may have when Canadian mortgage rates suddenly increases. Knowing that higher rates would also mean higher mortgage payments, economists are worried of the future problems that these Canadian families may have especially in their young age.
Such worries were brought up since economists are predicting that the Bank of Canada may have the tendency of raising their interest rates anytime within the year after they have kept the rates low for the previous months. With this in mind, Canadian families are expected to have higher mortgage payments in the following years especially when the interest rates are raised and still younger households will not have better to stable sources of income to pay off their debts.
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