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

• Nearly a quarter of Saskatchewan and Manitoba 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 Saskatchewan and Manitoba residents think we’re in a housing bubble.
• Almost half of Saskatchewan and Manitoba residents agree they are concerned about the impact of rising interest rates.
• Over 70% of Saskatchewan and Manitoba residents rate their ability to cope with a 1% interest rate increase as less than optimal.

REGINA, July 10, 2017 – A new survey released today by MNP LTD finds that Saskatchewan and Manitoba 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 Saskatchewan and Manitoba 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 Saskatchewan and Manitoba 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 people are using debt to finance lifestyles they simply can’t afford, whether they’re borrowing on their home or turning to other sources of credit. What’s concerning is that many are not making regular payments against the principal. An increase in interest rates could be right around the corner, and that could make it even harder for people to make ends meet,” says Regina-based Pamela Meger, Licensed Insolvency Trustee at MNP LTD, a division of MNP LLP.

Three in ten (29%) of Saskatchewan and Manitoba 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 Saskatchewan and Manitoba 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 Saskatchewan and Manitoba residents rate their ability to cope with a 1% interest rate increase as less than optimal. The vast majority of Saskatchewan and Manitoba residents (78%) would have difficulty absorbing an additional $130 per month in interest payments on debt.
“If you find yourself paying only the minimum payments on your debts, you should be taking a critical look at your finances. It’s important to factor in interest rate changes to see if the debt amassed is actually affordable. For many, it already isn’t,” says Meger.

When asked about their personal debt situation, the majority of Saskatchewan and Manitoba 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, Saskatchewan and Manitoba residents gave themselves an average rating of 6.5.

With over 40% (41%) of Saskatchewan and Manitoba 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 Saskatchewan and Manitoba 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.

“Saskatchewan residents need to look ahead and plan for what could be some major financial changes. Those who are struggling to keep up with their debt payments should seek professional help now, before rates increase,” says Meger.

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

MNP LTD, a division of MNP LLP, is one of the largest personal insolvency practices in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working collaboratively with individuals to help them recover from times of financial distress and regain control of their finances. With more than 200 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit www.MNPdebt.ca to learn more.

About the Survey

These are some of the findings of an Ipsos poll conducted between June 19 and June 21, 2017, on behalf of MNP Debt. For this survey, a sample of 2,002 Canadians aged 18+ from Ipsos' online panel was interviewed online. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.