On Monday, Manulife Bank, a subsidiary of Manulife Financial (TSE: MFC) (NYSE: MFC), released its Debt Survey, and it doesn’t look too good for homeowners. Not surprisingly, two-thirds of those who do not own a home feel like home ownership is out of reach. However, the negative sentiment is spreading to existing homeowners.
Indeed, 18% of homeowners think that they can no longer afford the house they own. This is being caused by rising interest rates that are making mortgage and debt payments more expensive. As a result, these homeowners say they would be forced to sell their houses if rates continue to rise.
Unfortunately, the stress of higher interest payments is also negatively impacting the mental health of Canadians who are indebted, as almost 50% claim they wouldn’t be able to withstand unexpected expenses or consider changing summer vacation plans.
How Does This Impact Manulife?
Manulife Bank is a financial subsidiary of Manulife that offers lending services such as mortgages. If Canadians continue struggling with debt payments, it could negatively impact this portion of the business, as it would reduce the volume of loan originations or potentially lead to defaults.
It will be interesting to see if the increase in interest payments can make up for the decrease in volume. Nevertheless, I would assume that it won’t be able to.
Insider Transactions
Insiders have been quite active year-to-date when it comes to buying and selling shares. As you can see from the picture below, there has been a lot more buying than selling. As a result, the insider confidence signal is positive and above the sector average.
A noteworthy transaction came from Claude James Prieur, a company Director, who recently purchased almost $1 million worth of shares. Considering that the current value of his Manulife holdings is valued at $4 million, the recent purchase marks a substantial increase, indicating a high level of confidence.
Analyst Recommendations
Manulife Financial has a Moderate Buy consensus rating based on three Buys and eight Holds assigned in the past three months. The average Manulife Financial price target of C$27.31 implies 24% upside potential.
Final Thoughts
Manulife Financial is a solid company with good fundamentals and backing from analysts. Nevertheless, it can still be impacted if the economic landscape were to become worse.
