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

T

he MNP Consumer Debt Index has dropped to 85 points, down six points from the previous quarter. 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. This decline in the debt index signals increasingly negative debt perceptions despite the recent interest rate cut by the Bank of Canada. 

According to the index, more than half of Canadians express concern interest rates may not fall quickly enough to provide the financial relief they need. More than half say interest rates will need to drop much further before their financial situation significantly improves and two-thirds say they desperately need interest rates to go down. 

Canadians may have hoped for a more significant cut to interest rates or to experience a quicker impact from the reduction. With the prices of many daily necessities still high, many have not seen the meaningful decrease in their monthly expenses needed to ease their financial burdens. 

After two years of aggressive interest rate hikes, almost two-thirds of Canadians say high interest rates have had a negative impact on their household finances. Nearly half agree they are still concerned with their ability to repay their debts, even if interest rates decline. Notably, a third feel they are so heavily in debt that even lower interest rates would offer little relief.  

Canadians with an income of $40,000 or less are significantly more likely to say they have accumulated so much debt that lower interest rates won’t provide much relief. Nearly three in five say they will be in financial trouble if interest rates rise, increasing three points since last quarter. About two in five intend to save more or accelerate their debt repayment if interest rates drop in the next three months, potentially counting on interest rate cuts to improve their financial situation. However, nearly three in 10 believe that declining interest rates won’t affect them in any way. 

The data tells us that many Canadian households will need support to help manage their debt payments over the coming months, regardless of interest rates. MNP’s national team of Licensed Insolvency Trustees offers free consultations across the country to help severely indebted Canadians get unbiased debt advice, understand their rights, and determine the best path forward. Licensed Insolvency Trustees are the only federally regulated debt professionals who can assist with all the debt relief options, including Consumer Proposals and Bankruptcy, stop harassment from debt collectors, and discharge people from debt. 

Subscribe to MNP 3 Minute Debt Break on your favourite streaming service.