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

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anadians are becoming acutely aware of how interest rates and the cost of necessities impact their household budgets, as both measures continue on an upward trajectory. Increasing a staggering seven points since last quarter, six in 10 Canadians say they’re already feeling the effects of interest rate increases, according to the latest MNP Consumer Debt Index which is conducted quarterly by Ipsos on behalf of MNP Limited. 

Many Canadians are now being forced to make tough budget decisions to make ends meet. Nearly half say they’re cutting back on non-essentials such as travelling, dining out, and entertainment — while a third are buying cheaper versions of everyday purchases and driving less. More than a quarter are making the difficult decision to cut back on essentials such as food, utilities, and housing. 

Many households are trying to adjust their budgets and cut costs where they can to keep up with their monthly bills. But it’s likely to get worse before it gets better. Households will have to make increasingly difficult choices about what to cut as the cost of living continues to rise. Some could find themselves piling on debt to make ends meet. Further indication that Canadians could be in for a rough rest of the year, half of Canadians say they will be in financial trouble if interest rates go up much more. 

Moreover, more than half of Canadians say they’re concerned about the impact of rising interest rates on their financial situation and their ability to cover all living and family expenses in the next year without going further into debt. 

While the vast majority of Canadians agree they’ll be more careful with how they spend their money, more than half say they’re more concerned about their ability to pay their debts as interest rates rise.  Those concerned about upcoming bills and debt repayments should speak with a federally-regulated Licensed Insolvency Trustee who can help determine the best debt-relief solution through a confidential and unbiased assessment of their financial situation.  There comes a point when even the strictest budget won’t be enough to stave off financial problems. 

The MNP Consumer Debt Index is now in its fifth year of tracking Canadians’ attitudes about their debt situation and their ability to meet their monthly payment obligations. Despite the current economic environment with rising inflation and a surging cost of living, Canadians’ financial confidence has crept up slightly from last quarter. Now in its twenty-first wave, the Index increased three points since last quarter to 90 points — but remains well below the benchmark score established five years ago.  The Index was averaging high 90s and over 100 prior to and throughout the pandemic, but Canadians’ confidence in their personal financial situations has struggled to return to pre-pandemic scores.

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