COVID-19's Financial Impact on Canadian Consumers: Wave 7

The COVID-19 pandemic has created major economic and financial distress for consumers across the globe. Many jobs in the Canadian economy are already affected or at risk. To help organizations understand consumer impact and make informed decisions as the situation evolves, TransUnion is conducting research on consumers’ perceptions, expectations and ability to pay their bills. Here’s an overview of the main findings from the Wave 7 Report — based on data collected the week of July 27.

Shifting to recovery

Wave 7 data indicates consumers are the most confident they’ve been since the pandemic began. Fifty-three percent reported their household is negatively impacted by COVID-19, while 6% indicated they may be negatively impacted in the future — both figures the lowest they’ve been since the survey started in March.

Fifty-three percent say household income has been impacted

The proportion of consumers negatively impacted by COVID-19 decreased to 53%, well below the April high of 63%.

Regionally, the percentage of Western Canadians negatively impacted fell eight points to 49%; Central Canada remained flat at 56%; and 47% of consumers in Atlantic Canada indicated a negative impact (up five points from last month’s survey).

Gen X is the only generational cohort where the negative impact has increased — up three points to 58% since the previous survey.

Fifty-six percent affected by reduced hours or job losses

Of the consumers who are financially affected by COVID-19:

• Thirty-nine percent indicated this was due to a reduction in working hours (unchanged from the previous survey)
• Seventeen percent stated they had lost their job (down from 18%)
• Ten percent were small business owners reporting a loss of income or having to close (down from 11%)

Mortgage payments ranked lower, but the 26% of impacted respondents saying they’ll not be able to pay is the highest number since the survey started. This may be linked to the imminent expiry of deferrals.

Budget shortfall is C$877.20

On average, consumers who are affected expect they’ll be short by C$877.20 when paying bills or loans. This amount is down from C$922.20 in the last survey.

Thirty-one percent plan to pay only a portion of bills or debt

Consumers are paying down balances, with 31% indicating they intend to pay at least a partial amount of their bills — up three percentage points from the previous survey. Just under 30% say they’re using investments and savings to help pay bills (down four points).

Other mechanisms for making payments include:

• Borrowing money from a friend or family member (21%; down from 23% in Wave 6)
• Taking out personal loans for short-term liquidity (10%; up from 9%)

Thirteen percent said they don’t know how they’re going to pay (up from 12%).

Forty-one percent discussing payment options with lenders

The proportion of consumers surveyed who are receiving some form of financial accommodation dropped two points to 16%.

Business loans are the most common product for financial accommodation (22%; down significantly from 59% in the previous survey), followed by private student loans (22%; down from 26%) and auto leases (15%; replacing personal loans).

Of consumers with financial accommodations:

• Thirty-nine percent would prefer a repayment plan (up from 32% in Wave 6)
• Twenty-six percent want to extend the deferral (down from 28%)
• Eighteen percent would like to pay off all postponed payments with a lump sum (up from 15%)

Consumers looking to pay down debt faster

The most common changes made by households during lockdowns include cutting back on discretionary spending (59%), and cancelling subscriptions and memberships (30%). Respondents are also looking to deleverage and save, with 11% indicating they’re paying down debt faster, and 16% saying they’ve created an emergency savings fund.
 

Additional resources:
We’ve developed several resources to assist businesses and consumers in navigating this difficult time. To learn more about our weekly consumer research and download the latest reports and infographics, visit transunion.ca/financial-hardship-study