The latest MNP Consumer Debt Index finds the number of Canadians who are concerned they cannot make ends meet without going into further debt has reached the highest level in three years.
Conducted quarterly by Ipsos on behalf of MNP Limited, the Consumer Debt Index tracks Canadians’ attitudes about their debt and ability to meet their monthly payment obligations.
The latest debt index finds almost half of households are not confident they’ll be able to cover all living and family expenses in the next 12 months without taking on more debt. In fact, the proportion of Canadians who report being insolvent and unable to pay their monthly bills and debt repayments remains at the highest level recorded since the Index was created in 2017. Half say they are more concerned about their ability to repay their debts than they used to be.
The financial and economic impacts of Covid 19 have amplified debt challenges for many Canadian households. More than a third say their debt burden has worsened throughout the pandemic. On the other hand, the pandemic may have also given some a false sense of security. Nearly six in ten say they took advantage of low interest rates to make purchases they normally couldn’t afford. Business closures and restrictions kept more money in Canadians’ pockets. The question is whether they can hold onto these gains as the economy continues to re-open .
The MNP Debt Index has improved marginally through its 17th wave. However, there are several indications this latest uptick may be short lived. An expected increase in consumer spending, rising interest rates, and growing concerns about housing affordability are all potential challenges for Canadian households in the year ahead. Especially concerning is roughly half of Canadians remain within two hundred dollars of financial insolvency and nearly half expect to take on more debt in the next year just to cover their living expenses, the highest level in three years.
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