MNP Consumer Debt Index - April 2022 (3 Minute Debt Break)

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he enduring financial impacts of COVID-19 coupled with the pressures of rising interest rates and a higher cost of living are weighing down Canadians’ confidence in their personal finances. This, according to the MNP Consumer Debt Index which is conducted quarterly by Ipsos on behalf of MNP Limited.

Now in its twentieth wave, the Index tracks Canadians’ attitudes about their debt situation and their ability to meet their monthly payment obligations. It remains at an all-time low since its inception in June 2017, dropping one point in the first quarter of this year. 

Interest rate hikes have more people worried than last quarter, with four in 10 Canadians saying rising rates could drive them closer to Bankruptcy — a notable four-point increase since December. 

Six in 10 say they’re more concerned about their ability to pay their debts. The affordability crisis is increasing the financial pressure on Canadian households. Many are likely to increase their amount of debt to keep up with the cost of living and rising interest rates. But as interest rates rise, so will the cost of servicing some of those debts, making it more difficult to pay them down.

More than half of Canadians say they’re already feeling the effects of interest rate increases. Looking ahead, six in 10 say they’re concerned about the impact of rising interest rates on their financial situation, and two in 10 say they’re not financially prepared to deal with a rate increase of one percentage point. 

Those who own a home or who plan to renew their mortgage are at a higher risk when it comes to being unable to absorb higher interest rates. They’ll be facing monthly payments that are potentially hundreds of dollars higher than they’d initially planned for. With the increasing costs of food, gas, and groceries, it’s a perfect storm for some households that are already stretched to the max.

Those who rent their homes are not free from worry, however. Renters are most likely to be in a more precarious financial position in general — and to have their own concerns about the impact of higher interest rates. Renters are more likely to say they’re more concerned about their ability to repay their debts than they used to be compared to the general population and that they’ll be in financial trouble if interest rates go up much more. They’re also more likely to say rising interest rates could move them towards Bankruptcy.

Licensed Insolvency Trustees are the only professionals that can offer deeply indebted individuals with debt-relief options, including Consumer Proposals and Bankruptcy.  Both Bankruptcy and Consumer Proposals also offer legal protections to stop wage garnishments and end harassing phone calls from creditors. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee.

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