Debt-Burdened Manitoba And Saskatchewan Residents Already Feeling The Pinch Of Higher Interest Rates

According to a recent Ipsos poll conducted by MNP LTD., the increased cost of borrowing due to rising interest rates is causing many Manitoba and Saskatchewan residents to re-evaluate their relationship with debt. More than seven in 10 (72%) people who responded to the survey say higher interest rates will cause them to think twice about how they spend their money, while almost half (43%) admit they will be in financial trouble if rates go up much further. Nearly two in five (38%) say they've already felt the effects of increases that took place in July and September.

Night view of Downtown Winnipeg

Compared to previous survey results, the average household in Manitoba and Saskatchewan now has $196 less at the end of the month after bill and debt payments than they did in June. With close to half (45%) of people already within $200 of not being able to pay their bills, nearly a quarter (23%) worry future increases could push them to ward bankruptcy.

Concerningly, the results indicate that while Manitoba and Saskatchewan residents are going to be stressed by more expensive debt, their debt burden will likely get worse rather than better over the foreseeable future. When presented with six unpredictable scenarios, less than half believed they could deal with them without taking on more debt. In fact, more than half (55%) expect to take on more debt over the next year just to cover basic living and family expenses.

The issue here isn't just the cost of debt increasing. Instead, it is a combination of people not earning enough to finance their lifestyles and not having enough emergency savings to cover unexpected costs – instead using inexpensive credit to get them through. Now that the cost to service that debt is increasing, many who were already overextended to begin with are finding themselves unable to make ends meet.

More than any other provinces nearly half (49%) of Manitoba and Saskatchewan residents who took the survey are concerned about the impact rising interest rates will have on their financial situation. Reflecting the increased burden previous rate hikes have already placed on their budgets, confidence in their ability to absorb another one percent interest rate increase dropped by five percent in since the previous survey in June; as did their perceived ability to take on an additional $130 in interest costs. Yet, surprisingly, at 67% they were also the least likely to believe they have a solid understanding how interest rates affect their financial situation.

Are you worried about rising interest rates and your ability to cope? We've created an online tool to evaluate your current debt health. Your results on the MNP Debt Scale will help you decide whether a Life-Changing Debt Solution may be right for you.

Other key poll highlights included:

  • Compared to other age groups, millennials are the most likely to be feeling the effects of interest-rate increases (40%). They are also the most concerned about the potential negative effects that rising interest rates will have on their financial situation (49%). In fact, four in 10 (38%) Millennials express concern that rising interest rates could move them towards bankruptcy, more so than Gen Xers (30%) and Boomers (18%). Millennials are also the least likely of their counterparts to say they have a solid understanding of how interest rate increases impact their financial state.
  • Lower income earning Canadians express the most concern towards rising interest rates.
  • Homeowners are slightly more optimistic that they will have the capacity to absorb an interest rate increase of 1 percentage point or an additional $130 in interest payments on debt.
  • The prospect of rising interest rates is prompting more concern in some parts of Canada than others. Fifty-five per cent of Albertans say that if interest rates rise, they'll be more concerned about their ability to repay their debts– ahead of those in BC and Quebec (47%), Saskatchewan and Manitoba and Atlantic Canada (45%), and Ontario (44%).
  • Concern about rising interest rates triggering a move toward bankruptcy is significantly more pronounced in Alberta (37%), followed by Quebec (34%), Atlantic Canada (32%), Saskatchewan and Manitoba and Ontario (23%), and B.C. (22%).
  • Only a minority of Canadians are confident that they wouldn't incur more debt if faced with a change in their relationship status like a divorce (33%), unexpected auto repairs or purchase (31%), having to take three months off work due to illness (30%), a job loss or wage decrease (28%), a death in the family (27%), or paying for someone's education (26%).

About the MNP Consumer Debt Index

These are some of the findings of an Ipsos poll conducted between September 18 and September 21, 2017, on behalf of MNP Debt. For this survey, a sample of 2,005 Canadians aged 18+ from Ipsos' online panel was interviewed online. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error. This represents the second wave of the MNP Consumer Debt Index.