Chilliwack, BC – Alarming statistics were released stating that Canadians are paying the highest percentage of their income, towards debt. Although the headline may seem alarming our Chilliwack mortgage brokers are advising that it’s in fact not as frightening as it sounds.
Yes, Canadians will have less disposable income left to spend on life outside of servicing their debts. The difference is that a significant amount of that debt payment is going towards principal pay-down rather than interest. In the early 90’s over 95% of debt payments went towards interest, whereas now 50% of our debt payments are going towards interest – that’s a 45% decrease in the percentage of that payment going towards interest while the remaining 50% is going directly towards paying down the principal amount on said debt owed.
The percentage of our income has barely budged for servicing mortgage debt, in fact majority of the increase in debt has been obtained outside of residential mortgages.
When talking to consumers, it appears that the mortgage payment itself isn’t core of financial stress for home–owners. The culprit causing this overwhelming amount of debt really derives from car loans, credit cards and lines of credit.
We think it would be beneficial for the government to consider regulating these industries in the same way they regulate mortgage financing.