Low interest rates and rising costs leading many Ontarians down ever-riskier path to borrow more

2021-10-04   minute read

Caryl Newbery-Mitchell

Six in 10 Ontarians are likely to pile on more consumer debt before the end of the year, including one in five who will use buy now, pay later options.

Toronto skyline at sunset with reflection of skyscrapers in the water

TORONTO, ON – October 4, 2021 –The latest MNP Consumer Debt Index raises red flags about Ontarians’ plans to borrow more — and in potentially riskier ways — to make ends meet or finance their purchasing habits heading into the holiday season.

Six in 10 (60%) are at least somewhat likely to borrow more before the end of this year, more than any other province. This includes four in 10 (39%) who say they’re inclined use a credit card that already carries a balance. Buy now, pay later (BNPL) options which have boomed alongside the pandemic-induced spike in online shopping and financial instability will likely be the method of payment for one in five (19%) Ontarians this fall. Around the same number (21%) are looking at purchase finance options, and 15 percent say they’re likely to apply for a new credit card. Moreover, one in 10 (7%) are considering a payday loan.

“Buy now, pay later options are growing in popularity, especially for those with tight finances. However, retail incentives that offer the instant gratification of buying goods now and paying later are not always good value for consumers because it’s easy to underestimate or misunderstand the payment terms, fees, and interest charges,” says Caryl Newbery-Mitchell, a Licensed Insolvency Trustee with MNP LTD in Toronto. She cautions Ontarians about the allure of borrowing more through quick credit and BNPL offers increasingly touted by online retailers.

“What Ontarians need to remember is credit options like buy now, pay later, installment plans, credit cards and payday loans benefit the lenders the longer people stay in debt. They work against you because of the high interest costs and various fees for processing and/or late payments,” she says.

Rock bottom interest rates have left Ontarians feeling more comfortable with increasing their debt. Notably, nearly half (48%) say they’re more relaxed about carrying debt than usual — up a significant seven points since last quarter. Moreover, six in 10 (59%) say low interest rates provide a good opportunity to buy things they otherwise couldn’t afford.

But Ontarians also know the low interest rate environment must end at some point. Nearly half (48%, -9pts) report they are $200 or less away from financial insolvency, including nearly three in 10 (28%, -12pts) who say they already don’t make enough to cover their bills and debt payments. While both proportions have dropped significantly since the last quarter, the declines have merely returned Ontarians closer to the national average. It’s therefore no surprise the majority (53%, +4pts) are still concerned about the impact of rising interest rates on their financial situation. One in three (33%, -3pts) worry rising interest rates could move them toward Bankruptcy.

“It’s important to remember you’re taking a financial risk every time you borrow. Interest rate increases, unexpected income loss, emergency expenses, or life-changing events are all potential outcomes that can make repayment near impossible — so you have to weigh these risks,” says Newbery-Mitchell.

With uncertainty around the fourth wave of COVID-19, Ontarians express some concern about their ability to cope with life changes without increasing their debt load. Many say they could not cope financially with an unexpected auto repair (20%, -4pts) or having an illness and being unable to work (28%, -4pts). One in three (33%, +3pts) doubts they could cope with a loss of employment or a change in work without going into debt.

“Rising costs for housing, food, and necessities are other significant issues we see playing out in our research. Ontario households are struggling more with the rising cost of living. With price increases, some may take on more credit to make ends meet while others will have less room in the budget for debt repayment,” says Newbery-Mitchell.

Affordability concerns are widespread across Ontario, with a large proportion believing life’s necessities have become more expensive over the past year. Forty-six percent say it’s becoming less affordable to feed themselves and their family. One in three (34%) say housing costs are less affordable, and around the same number say clothing or household necessities (37%) and transportation (33%) are costing more. More Ontarians also say that it’s becoming less affordable for them to put money aside for savings (42%) or towards their debt (29%).

“Unmanageable debt is stressful. But for anyone struggling, there is professional debt help available from qualified professionals who are specifically trained to get you out of debt. Licensed Insolvency Trustees offer free, unbiased consultations that can help anyone find relief from financial stress,” says Newbery-Mitchell.

Every Ontarian can obtain a free and confidential assessment of their financial situation with a Licensed Insolvency Trustee. As the only government-regulated debt professionals, they provide a full range of debt-relief options, including Consumer Proposals, informal debt settlements and Bankruptcies.


MNP LTD, a division of the national accounting firm 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 240 offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3 Minute Debt Break Podcast.

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, 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.

The Index has dipped by two points since last quarter to 95 points, having remained steadily below the established benchmark of 100 points for the last two years.

The latest data, representing the eighteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between September 3-7, 2021. For this survey, a sample of 2,001 Canadians aged 18 years and over was interviewed. 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.

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