Higher interest rates, unexpected expenses or a drop in income will present challenges for a significant number of Canadian homeowners, especially younger ones.

A new survey from Manulife Bank found that 52 per cent of homeowners lack the ability to adjust finances due to an unexpected change in circumstances and 1 in 4 has not been able to pay all their bills at least once in the last 12 months.

With mortgage debt up 11 per cent to $201,000 last year, the lender says that millennials are most at risk because their mortgage debt rose more than any other generation.

“The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income,” says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. “However, building flexibility into how they structure their debt can help ease the burden.”

A 10 per cent rise in mortgage payments would be a problem for 70 per cent of respondents nationwide; 76 per cent in Quebec.

For older Canadians, there are also challenges. Baby Boomers responding to the survey said that home equity is 60 per cent of their wealth; for a fifth it makes up 80 per cent. With three quarters wanting to stay in their home, they are likely to need to release its equity to top-up retirement funds.

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