MNP Survey: Manitoba & Saskatchewan Residents Concerned About Impact of Interest Rate Hikes and Potential Housing Bubble

• Nearly a quarter of Manitoba and Saskatchewan residents with a mortgage agree they are ‘in over their head’ with their current mortgage payments.
• Nearly three in ten homeowners agree they will face financial difficulties if the value of their home goes down, six in ten Manitoba and Saskatchewan residents think we’re in a housing bubble.
• Almost half of Manitoba and Saskatchewan residents agree they are concerned about the impact of rising interest rates.
• Over 70% of Manitoba and Saskatchewan residents rate their ability to cope with a 1% interest rate increase as less than optimal.

WINNIPEG, July 10, 2017

A new survey released today by MNP LTD finds that Manitoba and Saskatchewan residents are concerned about the uncertainty of a potential housing bubble and impending interest rate hikes, adding financial stress to households already carrying a record level of debt.

Almost half (45%) of Manitoba and Saskatchewan residents and nearly half (48%) of Canadian homeowners are concerned about the impact rising interest rates will have on their finances. At the same time, six in ten Manitoba and Saskatchewan residents (60%) are worried about the potential impact that a decline in house prices might have on homeowners, the highest proportion compared to other provinces.

“Many are simply financing lifestyles they can’t afford, whether they’re borrowing on their home or using other sources of credit. What’s troubling is that many are not making regular payments against the principal. With an increase in interest rates on the horizon, Manitobans may find it even harder to make ends meet,” says Winnipeg-based Gord Neudorf, Licensed Insolvency Trustee at MNP LTD, a division of MNP LLP.

Three in ten (29%) of Manitoba and Saskatchewan home owners say that they will be faced with financial difficulties if the value of their home goes down. Even if home values don’t decline in the near future; nearly a quarter of Manitoba and Saskatchewan residents (23%) who have a mortgage agree that they are ‘in over their head’ with their current mortgage payments.

Homeowners aren’t the only ones concerned. Over 70% of Manitoba and Saskatchewan residents rate their ability to cope with a 1% interest rate increase as less than optimal. The vast majority of Manitoba and Saskatchewan residents (78%) would have difficulty absorbing an additional $130 per month in interest payments on debt. 

“For far too long, we’ve been paying the minimum payment on debts. We need to start looking critically at our debt loads and consider the impact an increase in rates could have. For many, it will make those debts unaffordable, if they aren’t already,” says Neudorf.

When asked about their personal debt situation, the majority of Manitoba and Saskatchewan residents don’t feel optimistic. Six in ten (60%) rated their debt situation as less than good, while 17% rated their situation as bad. On a scale of one to ten, from terrible to excellent, Manitoba and Saskatchewan residents gave themselves an average rating of 6.5.

With over 40% (41%) of Manitoba and Saskatchewan residents finding themselves within $200 per month of financial insolvency, there is little wiggle room left to pay any unexpected bills or debts. If that amount is increased to $300 per month, a staggering 51% of Manitoba and Saskatchewan residents would be on the verge of insolvency, with nearly one in four (23%) not making enough to cover their bills and debt payments. Nearly four in ten (39%) say they are concerned about their current level of debt.

“Manitoba residents need to start looking ahead, and bracing themselves for financial changes ahead. Those who are already struggling should seek out professional help to create a realistic plan to pay down their debts,” says Neudorf.

Other poll highlights include:

• Over a quarter (27%) of Canadians with a mortgage agree that they are ‘in over their head’ with their current mortgage payments. This includes more than one in three Quebecers (35%), followed by residents of B.C. (32%), Alberta (31%), Atlantic Canada (25%), Saskatchewan and Manitoba (23%) and Ontario (21%).
• Half of Canadians (51%) are concerned about the potential impact on home owners that a decrease in house prices might bring.
• Over forty (44%) of Canadians are within $200 of financial insolvency at the end of the month, down 8 points from March 2017 and 12 points from September 2016.
• Women are significantly more likely (48% women vs. 39% men) than men to be within $200 of insolvency at month-end.
• Gen X’ers are more likely (48%) to be within $200 of insolvency at month-end, compared to Millennials (43%) and Baby Boomers (40%).
• Half of Canadians (50%) are $300 per month away from being financially insolvent.
• Atlantic Canadians are the most likely to rate their personal debt situation as ‘bad’ – the highest in the country at 22%.
• While two in three Canadians (67%) think we’re in a housing bubble, only a minority (43%) expect that bubble to burst through a decline in house prices in the next year. Half (51%) are concerned about the potential impact on home owners that such a decrease might bring.

About MNP LTD

About the Survey