More than half of Ontarians concerned about impact of rising interest rates

• More than four in 10 (45%) say they will be in financial trouble if rates rise, 34 percent say rising rates could move them towards Bankruptcy.
• Four in ten (42%) believe feeding their family has already become less affordable.
• One quarter (26%) say they do not have a solid understanding of how interest rates impact their financial situation.
• Eight in 10 (81%) say they will be more careful with how they spend their money with interest rates rising.

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ORONTO, ON – February 22, 2022 – As the country inches closer to the Bank of Canada’s next interest rate announcement on March 2, 2022, many Ontarian households stretched thin by rising costs of living over the COVID-19 pandemic will be bracing for a potentially challenging year ahead. More than half of Ontarians (53%, unchanged from September) are concerned about the impact of rising interest rates on their financial situation, according to a recent poll conducted by Ipsos on behalf of MNP LTD.

About half say they are more concerned about their ability to repay their debts than they used to be (53%, -1pt) — and more than two in five worry they will be in financial trouble if interest rates go up much more (45%, unchanged). Thirty-four percent (+1pt) agree rising interest rates could move them toward Bankruptcy.

“Ontarians are concerned about how they would cope with increasing interest rates as we inch closer to what is likely the first of several rate hikes this year,” says Caryl Newbery-Mitchell, a Licensed Insolvency Trustee with MNP LTD in Toronto. “Individuals who are most vulnerable include those who are using credit to make ends meet and aren’t able to pay down the debt they owe. Unfortunately, these additional debt servicing costs are happening at a time when many households in Ontario are already finding it less affordable to feed their families or pay for housing or basic household needs.”

With the price of goods and services rapidly rising, Ontarians are finding many areas of their day-to-day lives have become less affordable over the past year, including feeding themselves or their family (42%), putting aside money for savings (42%), clothing and other household necessities (37%), transportation (33%), housing (38%), and putting money towards paying down debt (31%). Four in 10 (41%) say at least half of these areas of their lives have become less affordable.

Further evidence of affordability concerns, eight in 10 (81%, +1pt) say they will be more careful in how they spend their money with interest rates rising.

“There has been a great deal of chatter surrounding the impending interest rate increases this year, and it’s promising to see Ontarians are taking note and acknowledging the need to adjust their spending behaviour,” says Newbery-Mitchell. “But we need to keep in mind that a lack of financial literacy impacts the poll findings, as we know many Ontarians don’t have a good grasp of how their personal finances can be affected by interest rate increases.”  

With many predicting gradual rate hikes throughout 2022, about a quarter (26%) say they do not have a solid understanding of how interest rates impact their financial situation, up three points from September. Two in 10 (18%, +1pt ) say they are concerned about their ability to absorb an interest rate increase of one percentage point.

“Those who are already struggling with their finances or anticipate they will be struggling in a higher rate environment should seek out professional guidance to help manage their debt. Our hope is they will be proactive and reach out for help early on, ensuring they have a wider range of options to deal with their debt,” says Newbery-Mitchell.

Anyone can obtain a free and confidential assessment of their financial situation with a Licensed Insolvency Trustee at MNP LTD. As the only government-regulated debt professionals, Licensed Insolvency Trustees provide a full range of debt-relief options, including Consumer Proposals, informal debt settlements and Bankruptcies. With specialized debt training and education, Licensed Insolvency Trustees take a customized approach to determine the most suitable debt-relief options. 

Other key poll highlights include:

• Nearly half (47%, +2pts) of Ontarians say they are already beginning to feel the effects of interest rate increases.
• Four percent say they will renew their mortgage in the next year.
• More than a quarter (27%) say they have only paid the minimum balance on a credit card or personal line of credit.
• One in 10 (12%) say they have borrowed money they could not afford to pay back quickly.
• Fifteen percent rate their financial situation as ‘poor’.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3 Minute Debt Break Podcast. 

About the Survey

The data was compiled by Ipsos on behalf of MNP LTD between December 1-7, 2021. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. 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.

A summary of some of the national data is available by request.