Improved Debt Increasing Confidence For Atlantic Canadians

A recent Ipsos poll conducted by MNP LTD. indicates a significant improvement in Atlantic Canadians’ debt situations over the past four months. Nearly three in five (59%) Atlantic Canadian debt holders say they feel more confident in their overall financial outlook than they did in March. This includes three in ten (29%) who say their debt is better than it was five years ago and more than one in three (36%) who say it’s better than it was at this time last year — a four-point improvement in both cases.

Person holding their phone in front of a laptop

A recent Ipsos poll conducted by MNP LTD. indicates a significant improvement in Atlantic Canadians’ debt situations over the past four months. Nearly three in five (59%) Atlantic Canadian debtholders say they feel more confident in their overall financial outlook than they did in March. This includes three in ten (29%) who say their debt is better than it was five years ago and more than one in three (36%) who say it’s better than it was at this time last year — a four-point improvement in both cases.

Even in a climate of uncertain interest rates, Atlantic Canadians are feeling much more optimistic of late. When questioned about their ability to manage either a 1% or $100 increase to their monthly debt-servicing costs, a growing number (33%, up 7%) predict they can manage. And fewer (37%, down 4%) worry an interest rate hike will bring them closer to bankruptcy.

However, some troubling figures may serve to temper their enthusiasm. Although the number who worry subsequent interest rate increases will push them toward bankruptcy has fallen by four points, more than two in five (42%) remain concerned of the possibility. At the same time, less than half (49%) of Atlantic Canadians say they’re confident they can to afford all living and family expenses over the next 12 months without requiring credit to fill in the gaps. And even with the number of people who are $200 or less from financial insolvency on a steady decline since January, a two percent drop leans more than two in five Atlantic Canadians (41%) on the brink.

Most concerning of all: A full quarter (25%, down 2%) of Atlantic Canadians say they have zero wiggle room at the end of the month after paying their bills and debt obligations.

That’s not to imply the improvements above are merely an illusion. Stats Canada report released in June which noted the household debt ratio experienced the largest drop on record in the first four months of 2018. With that said, many believe this owes more credit to new mortgage rules and higher interest rates than consumer debt reduction efforts.

In other words — it’s good to be optimistic, but there’s still a long way to go before Atlantic Canadians can say they’re truly out of the woods.

What is encouraging is that nearly two thirds of Atlantic Canadians (62%) have reduced their variable expenses (e.g. entertainment, dining out, etc.). Nearly one in three (32%) have committed to a regular budget and the same number have cut back on fixed expenses such as housing costs and car payments. And more than one in five (22%) have sold items while nearly one in ten (8%) have taken on additional employment.

Less encouraging is that only 5% have sought help from a debt professional. With 25% on the brink of bankruptcy and given the severity of their situation, it’s doubtful incremental changes will be sufficient to achieve the financial fresh start many Atlantic Canadians need — especially as quickly as they need it. The sooner these people speak with someone, the sooner they can have peace of mind and the sooner they can get out of debt and back to life.

Other poll highlights include:

  • Four in ten Canadians (41%) rate their debt situation as excellent, up 5 points since March.
  • Regionally, British Columbians (47%) are most likely to rate their personal debt situation as excellent, followed by Atlantic Canada (46%), Quebec (44%), Ontario (41%), Alberta (36%), and Saskatchewan and Manitoba (30%).
  • There is also a generational divide, as Boomers (49%) are more likely to rate their debt situation as excellent compared to 37% of Millennials and Gen Xers.
  • Fewer Canadians say they are already beginning to feel the effects of interest rate increases (38%, down 5 points), while more now say they have a solid understanding of how interest rate increases impact their financial situation (78%, up 4 points). Less than half of Canadians (47%, up 1 point) express concern toward the impacts rising interest rates could have on their financial situation.
  • While concern over interest rates have softened, a majority (77%) continue to brace themselves for the possibility of an increase and agree that they will be more careful with how they spend their money.
  • Overall concern about rising interest rates have decreased since March, with fewer Canadians concerned about moving towards bankruptcy (28%, down 5 points), repaying their debts (49%, down 2 points), and being put into financial trouble (42%, down 2 points) if interest rates rise.
  • Overall, Canadians are gaining confidence in their ability to cope with unexpected life changes without taking on more debt. That includes: being able to cope with an unexpected auto repair or purchase (35%, up 7 points), a change in relationship status (36%, up 4 points), and paying for their own or someone else’s education (28%, up 4 points).
  • Looking to the future, Canadians are far more optimistic: one year from now, 38 per cent of Canadians expect their debt situation to be better, while nine per cent expect it to be worse, giving a net 29 per cent score, the highest since tracking began. Five years from now, half (50%) of Canadians think their personal debt situation will be better and only eight per cent think it will be worse. The net score has increased 5 points since March (37% to 42%) and 4 points since December (38% to 42%), also the highest since tracking began.
  • Though things may be looking up for some, half (50%) of Canadians are not confident that they will not have any debt in retirement.

About MNP Debt

MNP LTD, a division of MNP LLP, is the largest personal 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 June 15 and June 19, 2018. For this survey, a sample of 2,001 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 fifth wave of the MNP Consumer Debt Index.