Canadian seniors are getting a lot more comfortable with debt and a growing number are using it to finance their lifestyle, including home purchases, according to an exclusive survey provided to the Financial Post.
The survey conducted by debt rating agency Equifax for HomEquity Bank, at the end of July, found that a number of Canadians over 75 are still dealing with a mortgage — and their numbers are rising.
“They just don’t have enough money,” said Yvonne Ziomecki, senior vice-president of marketing and sales of HomEquity Bank, of the new lifestyle seniors are aspiring to. “We have a new term we have been using, right sizing. They are not downsizing. They don’t really need bigger homes, but they move into a house that has all the upgrades.”
HomEquity, which provides reverse mortgages, says those types of “downsized” homes are often the subject of loans. Consumers can get a reverse mortgage as long as they have 55 per cent equity in a home.
While seniors with mortgages are still a small share of the market, the study did find 11.3 million Canadians 55 or older have some sort of debt. Of that figure, about 1.87 million are carrying a mortgage which is up 20 per cent in two years.
Outstanding mortgage balances are up for every segment of seniors, which for the purposes of the survey was anyone over the age of 55. In the 75-and-over category, the average senior with a mortgage had $133,944 outstanding, up 11 per cent from two years ago.
What’s going on? Some seniors are just adjusting to a lifestyle where debt will get them nicer homes, fund more vacations or even help their adult children.
“A lot of people I talk to, they just don’t really care. This is how they manage their finances and they are perfectly comfortable with it,” Ziomecki said.