MNP Consumer Debt Index: Fear of rate hikes continues to intensify among Canadians


  • Nearly half say they are already feeling the effects of the interest rate increases, up 7 points since June
  • One-third express concern that rising rates could move them towards bankruptcy, up 6-points since June
  • Over half are concerned about their ability to repay their debts if interest rates continue to climb, up 3 points since June
  • Concern and regret about current debt levels has reached its highest point since tracking began

CALGARY, Alberta, Oct. 23, 2018 (GLOBE NEWSWIRE) -- As another interest-rate hike looms over Canadians, so does the increased possibility of financial turbulence. According to the latest MNP Consumer Debt Index, the fear of a rate increase has intensified over the past few months, as one-third of Canadians express concern that rising rates could move them towards bankruptcy, a 6-point increase since June. Over half of Canadians (52%; +3 points) now say they are becoming more concerned about their ability to repay their debts if interest rates continue to climb. The proportion of Canadians who say that they are feeling the effects of interest rate increases jumped seven points since June (45%) and just under half (45%) say that if interest rates go up much more, it could lead them to financial trouble.

“It’s been over a year now since the first interest rate increase and as rates continue to inch higher, more Canadians are feeling it. With little decrease in household debt and the pace of rate hikes expected to accelerate, we will likely see a more immediate and significant effect on borrowers with rate increases in the future,” says Grant Bazian, President at MNP LTD, the country’s largest personal insolvency practice.

Concern over rising rates is most prominent in the younger generation. Millennials aged 18-34 are more likely to express concern about rising interest rates whether that be the fear of repaying debts (62% vs. 57% Gen X’ers, and 40% Boomers), or moving them closer towards bankruptcy (46% vs. 38% Gen X’ers and 22% Boomers). Particularly when compared to their older counterparts, Millennials are most likely to say they are already feeling the effects of interest rate increases (50% vs. 48% Gen X’ers and 38% Boomers).

“Millennials have never experienced a time when credit wasn’t cheap and easily accessible. Some have over extended themselves on their homes and vehicle payments and are in the habit of relying on credit to cope with any kind of unexpected expense,” says Bazian. 

The MNP Consumer Debt Index, conducted quarterly by Ipsos, measures Canadians’ attitudes about their consumer debt, and their perception of their ability to meet their monthly payment obligations. The index has declined three points to 103 since June 2018, suggesting a very slight overall improvement in Canadians’ debt situation and attitudes.

Eight in ten (79%) Canadians say that with rising interest rates, they will be more careful with how they spend their money. This may explain why the majority remain more positive than negative towards their debt situation, despite their concern about personal finances in a higher rate environment. Nearly three in ten (28%) rate their current debt situation better than a year ago, and four in ten (39%) are optimistic that their expected debt situation will be better in a years’ time. Half (50%) foresee their debt situation improving over the next 5 years.

Despite this, concern and regret among Canadians about their current level of debt has reached its highest point since tracking began in June 2017. Forty per cent say they are concerned about their current level of debt and over forty per cent (43%) regret how much debt they’ve taken on in their life.

“Rising interest rates have forced people to take a more serious look at their debts. Still, many are reluctant to get professional help. They may not know where to go or they feel helpless,” says Bazian.

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 guarantee legal protection from creditors through consumer proposals and bankruptcies.

Other poll highlights include:

  • Atlantic Canadians show the most trepidation towards increasing interest rates. Sixty-five per cent of Atlantic Canadians say that as interest rates rise, they are becoming more concerned about their ability to repay their debts– ahead of those in Alberta (55%), Saskatchewan and Manitoba (53%), Ontario (52%), and BC and Quebec (both 48%).
  • Atlantic Canadians are most likely to state with rising interest rates they will be more careful with how they spend their money (87%), followed by Saskatchewan and Manitoba (86%), Ontario (83%), Alberta (77%), British Columbia (76%) and Quebec (72%).
  • Concern about rising interest rates triggering a move toward bankruptcy is more pronounced in Atlantic Canada (39%), followed by Alberta, Quebec and Ontario (all 34%), British Columbia (33%), and Saskatchewan and Manitoba (31%).
  • Canadians remain more positive than negative towards their debt situation, as nearly three in ten (28%) rate their current debt situation better than a year ago, and more than one in three (35%) say their debt situation has improved when compared to 5 years prior. Canadians also continue to be hopeful about the future, with four in ten (39%) Canadians believing their expected debt situation a year from now will improve, and half expect their situation to improve within the next 5 years.
  • Albertans (20%) are most likely to say their current debt situation is worse, followed by residents of Atlantic Canada (17%), Saskatchewan and Manitoba (15%), Ontario (13%), Quebec (10%), and British Columbia (8%).
  • Quebec residents (49%) are most likely to rate their personal debt situation as good, followed by residents British Columbia (45%), Ontario (38%), Saskatchewan and Manitoba (34%), Alberta (33%) and Atlantic Canada (28%).

About MNP Debt

MNP LTD, a division of MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working 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 each year who are struggling with an overwhelming amount of debt. Visit www.MNPdebt.ca to contact a Licensed Insolvency Trustee or get a free checkup for your debt health using the MNP Debt Scale.

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, follow a budget, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians. Visit www.MNPdebt.ca/CDI to learn more.

The latest Index data was compiled by Ipsos on behalf of MNP LTD between September 10 and September 17, 2018. For this survey, a sample of 2,003 Canadians from the Ipsos I-Say panel was interviewed online. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +/- 2.5 percentage points, 19 times out of 20, of what the results would have been had all Canadian adults been polled. Credibility intervals are wider among subsets of the population. This represents the sixth wave of the MNP Consumer Debt Index.

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