MNP Consumer Debt Index Update: Canadians Are Seeing
CALGARY, Alta., Oct. 28, 2019 (GLOBE NEWSWIRE) – Even though the Bank of Canada has said it will keep interest rates stable until next year, more than half (54%) of Canadians say they are more concerned about their ability to repay their debts than before. The worry could be the result of declining room for maneuver in household budgets. After paying all of their current bills and obligations, Canadians say they have, on average, $ 557 left at the end of the month, down $ 142 from June and the lowest level since monitoring began in February. 2016. Almost half (48%, +4 pts) say they have less than $ 200 left, including three in ten (29%) who say they are not already making enough money to cover all their bills. and debts each month (+4 pts).
The results are part of the latest MNP consumer debt index produced quarterly by Ipsos. Now in its tenth wave, the index tracks Canadians’ attitudes about their consumer debt and their perception of their ability to meet their monthly payment obligations.
“We are seeing less and less room for maneuver in household budgets. Many Canadians don’t have enough to cover all their expenses let alone put anything aside to spare for rainy days, ”said Grant Bazian, President of MNP LTD, the country’s largest insolvency firm. “The reason this is alarming is that it is often unforeseen expenses that force people to take on more debt than they can afford and that initiate a cycle of increasing service costs and potential costs. default of payment.
It’s no surprise that with less money in the bank at the end of the month, the ability of Canadians to meet unexpected expenses has been shaken. Seven in ten are unconfident in their ability to cope with life-changing events – such as a divorce, unexpected auto repairs, job loss, or the death of a family member – without increasing their debt.
“Unexpected expenses can plague people regardless of age or income, but they are more devastating for people who already have a large amount of debt. Our research shows that most households don’t have enough money for inevitable life events like a car repair, ”says Bazian who recommends saving at least three to six months of emergency expenses. .
Canadians may have less money at the end of the month to avoid sudden spending, but surprisingly enough, they are generally increasingly positive about their personal finances. According to the index, three in ten (27%) say their debt situation is better than a year ago (+3 pts) and about the same number (35%) say it is better than five years ago (+ 2 points). In addition to being optimistic about the present, an even larger proportion feel more positive about the future, with four in ten (39%) expecting their debt situation a year from now to be better (+ 3 pts), and half (50%) believing that it will be better in five years (+3 pts).
“Household debt has eased slightly and the current pattern of maintaining interest rates may give Canadians a sense of optimism about their finances. Still, the fact remains that many are going into debt and most don’t have a clear path to repayment, ”says Bazian, noting research evidence showing that many may intend to take on more. credit to make ends meet over the next year. .
Almost half (47%) of Canadians say they don’t think they’ll be able to cover all of their living and family costs in the next 12 months without taking on more debt, a two-point increase since June. In addition, just under half (48%) are convinced that they will have no debt in retirement, a drop of three points.
“It seems that many have resigned themselves to owing money for life. Interest rates may remain stable for now, but that’s a cold comfort to those who are already having trouble repaying their debts at the current rate, ”Bazian said.
A large portion of Canadians (47%) are worried about the impact of rising interest rates on their financial situation, down two points since June. Forty-five percent agree that if interest rates rise much more, they fear being in financial difficulty (-4 pts). Finally, a third (34%) still fear that the rise in interest rates will push them into bankruptcy (-2 pts).
“Whether you’re struggling with credit card debt, a line of credit, a mortgage, a car loan, or all of the above, now is the time to pay it off. If you feel like your debt is out of control, seek professional help to help you design a debt relief strategy. Beyond taking on more debt to deal with debt, the biggest mistake people make is waiting too long to ask for help, ”Bazian explains.
MNP LTD offers free consultations with Licensed Insolvency Trustees to help individuals understand their debt relief options. Licensed Insolvency Trustees are the only government regulated debt professionals who offer a full range of debt relief options and can provide legal protection against creditors through consumer proposals and bankruptcy.
About MNP LTD
MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency firm in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and Advisors have worked with individuals to help them recover from times of financial distress and regain control of their finances. With more than 230 Canadian offices from coast to coast, MNP helps thousands of Canadians with an overwhelming amount of debt each year. Visit DebtMNP.ca to contact a Licensed Insolvency Trustee or use our DIY Debt Assessment Tools.
About the MNP Consumer Debt Index
the MNP Consumer Debt Index measures the attitudes of Canadians towards their consumer debt and assesses their ability to pay their bills, incur unforeseen expenses and absorb fluctuations in interest rates without approaching insolvency. Produced by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians. Visit www.detteMNP.ca/CDI to learn more.
The latest data, representing the tenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between September 4 and 9, 2019. For this survey, a sample of 2,002 Canadians aged 18 and more was questioned. The accuracy of online surveys is measured using a credibility interval. In this case, the results are accurate to +2.5 percentage points, 19 times out of 20, of what they would have been if all Canadian adults had been interviewed. The credibility interval will be wider among subsets of the population. All polls and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.
A summary of provincial data is available upon request.
The photos accompanying this announcement are available on: