TORONTO – Canadian consumers aren’t putting their words into action when it comes to shedding personal debt, according to the 2013 PwC Consumer Lending Survey. While more than half (57%) of Canadians are comfortable with their debt levels, a significant amount (35%) think they have borrowed too much. However, an overall resolve to reduce isn’t translating into results.
Regardless of the loads they carry, the majority of respondents (63%) said last year that they intended to take steps to reduce their debt. But, only 23% reported real success against this goal and another 26% were outright unsuccessful. Furthermore, not only are Canadians finding it hard to cut down on debt, they have also become less likely to delay purchases that require taking on extra loans.
“With the average Canadian debt sitting at more than 160% of disposable income, the current trend is unsustainable—both for consumers and the banks who lend to them,” says John MacKinlay, National Financial Services Consulting Leader at PwC. “Similar with any diet, saying you’ll cut back and make better choices is one thing, while actually doing it is quite another. We advise Canadians to take a hard look at their discretionary spending and prepare to make some tough choices on where to trim the fat.”
Consumer confidence slowly rising
While debt levels may be high, so is consumer confidence. Despite a turbulent market since the 2008 recession, 55% Canadians feel that the economy will remain steady or grow, up from 48% in 2012. And, nearly half (46%) feel that their incomes will increase over the next five years, suggesting that consumers feel more comfortable carrying a heavier debt load than they would have in tougher times.
“The bullish attitude about prospects and earning power demonstrates a sense of optimism not commonly felt in the last five years,” says Andrew Smee, Director in Consumer Lending Practice at PwC. “Still, we’re not completely on solid ground yet, and it’s important for both consumers and banks alike to remain cautious about lending and borrowing.”
About the 2013 PwC Consumer Lending Survey
The 2013 PwC Consumer Lending Survey was conducted online using Leger Marketing’s online panel, LegerWeb. A sample of 1,228 Canadians, aged 18 or older, was surveyed. Results are considered accurate to within 2.8 percentage points, 19 times out of 20.
About PwC Canada
PwC Canada helps organizations and individuals create the value they’re looking for. More than 5,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with close to 169,000 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.
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