Almost two thirds of Canadians plan to decrease debt over the next 12 months

TORONTO, Dec. 13 /CNW/ - A majority of higher income Canadians are comfortable with their debt levels (67%). Despite this, most (64%) plan on decreasing their debt over the next 12 months, according to a consumer lending survey released today by PwC.

"Interestingly, while reducing debt appears important to a sizeable number of survey respondents, it isn't driven by fear of job loss as only 9% cite that reason for paying down their debt," according to John MacKinlay, Partner and Financial Services Advisory Leader for PwC.

What are Canadians most willing to delay purchasing in their efforts to reduce their borrowing levels? According to the survey it is big ticket items:

•A new car - 64%
•New electronics - 59%
•A new house - or upgrade to bigger house - 56%
"Even with relatively high consumer debt levels, 78% of respondents said that they think they have the capacity to borrow even more," says MacKinlay

The PwC survey was conducted by Leger Marketing in the fall of 2010 and a total of 603 interviews were completed among Canadian adults with an annual household income of over $100,000. A probability sample of this size yields a maximum margin of error of +\-4.0%, 19 times out of 20.

Overall, the vast majority of respondents are satisfied with the service they receive from their current bank and they would recommend their bank to a friend or family member. "The survey results show that Canadians are confident in our economy and they enjoy a good relationship with their banks," says MacKinlay.

That said, the report indicates Canadians would like more advice on credit management. Consumers seem to be looking for new products to help them better manage their debt, such as an integrated lending product. "But consumers told us they need a lot of advice around this type of product - and this conversation can be an opportunity for the banks to enhance the dialogue with their customers and to help educate them on all the options that are available," says Andrew Smee, Vice President, Financial Services Advisory at PwC.

"Integrated lending products combine all of a customer's borrowing into a single, easy to modify account, with the ability to set up individual facilities. For example, part of the loan could be a fixed rate for five years, part fixed for a shorter duration, and the rest available as a line of credit," says Smee.

Less than one in five respondents has an integrated lending product. However, when the survey described the characteristics of such a product, overwhelmingly, 87% of respondents would consolidate their debt into a single, easy to modify loan if the rate were lower. "We think that this is a good example of a win-win product: the customer gets the flexibility to set up individual facilities with different rates and terms, and potentially more money at a lower rate of interest. As well, the bank decreases risk and increases share of wallet on a long duration credit product," says Smee.

Approximately half of respondents would require advice from their banker before considering moving to this type of product. Interestingly, 47% of respondents have a personal banker. However, only 38% of those who have personal bankers meet regularly with them to discuss their personal financial situation. Seventy-seven per cent say they only meet with their personal bankers "when they want to get or change something."

"The good news is that of those who do have a personal banker, an impressive 86% value the advice they receive. So we see this as an excellent opportunity for banks to build awareness and educate their clients on the potential benefits of such an integrated lending product in helping them to responsibly manage debt. This is a relatively complex credit offering, and as such, it is necessary for personal bankers to have a conversation to understand their clients' needs, so that they can best position the most relevant product features," says MacKinlay.