More than half of Newfoundland and Labradorians say interest rates will need to drop much further before their financial situation significantly improves

• Seven in 10 say they desperately need interest rates to go down (69%).
• Half express concern that interest rates may not decline quickly enough to provide the financial relief they need (51%).
• Two in five agree they are still concerned with their ability to repay their debts, even if interest rates decline (44%).
• Nearly half of Atlantic Canadians are $200 or less away from failing to meet all their financial obligations, more than those in any of the other provinces (48%).

ST JOHN’S, NL – July 22, 2024 – Atlantic Canadians are feeling pessimistic about their personal finances, despite the recent interest rate cut by the Bank of Canada. The MNP Consumer Debt Index finds half of Atlantic Canadians are concerned that interest rates may not decline quickly enough to provide the financial relief they need (51%). More than half say interest rates will need to drop much further before their financial situation significantly improves (55%), and seven in 10 (69%) say they desperately need interest rates to go down.

“Atlantic Canadians may have hoped to experience a quicker impact from the interest rate cut, or a more significant reduction. This leaves some feeling disheartened,” says Karen Aylward, a local Licensed Insolvency Trustee with MNP LTD. “With the prices of many daily necessities still high, many have not seen the meaningful decrease in their monthly expenses needed to reduce their financial strain.”

After two years of aggressive interest rate hikes, three in five (62%) Atlantic Canadians say high interest rates have had a negative impact on their household finances. Two in five (44%) agree they are still concerned with their ability to repay their debts, even if interest rates decline. Notably, three in 10 (29%) feel they are so heavily in debt that even lower interest rates would offer little relief.

“Some individuals are living paycheque to paycheque, struggling to pay for day-to-day necessities and make ends meet. Others are grappling with such overwhelming debt that their financial difficulties simply aren’t manageable, regardless of interest rate changes,” says Aylward.

Consistent with last quarter, nearly half (48%) of Atlantic Canadians are $200 or less away from failing to meet all their financial obligations, more than those in any other province. Atlantic Canadians are also the most likely (35%, unchanged) to say they already can’t cover their bills and debt payments compared to those in other provinces.

“Those struggling to keep up with their financial obligations should consider speaking with a Licensed Insolvency Trustee, who can provide an impartial evaluation of the individual’s financial situation and offer advice on debt relief options,” says Aylward.

Debt perceptions among Atlantic Canadians have improved slightly this quarter. When asked to reflect on their current debt situation compared to one year ago, the proportion who perceive their current debt situation to be better (25%, +1 pt) remained relatively stable. Fewer this quarter (18%, -4 pts) rated their current debt situation as much worse compared to a year ago. Financial concerns still linger despite this shift, with a third (34%, +2 pts) of Atlantic Canadians concerned that they or someone in their household could lose their job.

“It's important to recognize that debt is not solely a personal failing. Many external factors can cause debts to spiral out of control, including job loss, unexpected income fluctuations, and the high costs of servicing debt — particularly credit cards. The rising costs of basic necessities, increasing mortgage and rental payments, and expenses such as emergency car or home repairs all contribute to rising debt,” explains Aylward.

Although fewer this quarter (54%, -4 pts) say they will be in financial trouble if interest rates rise, more than half of Atlantic Canadians still feel they would be in trouble financially. Potentially counting on interest rate cuts to improve their financial situation, about two in five intend to save more (40%) or accelerate their debt repayment (41%) if interest rates drop in the next three months. However, about a quarter (27%) believe that declining interest rates won’t affect them in any way.

“Some households may need support to help manage their debt payments over the coming months, regardless of interest rates. Licensed Insolvency Trustees are an accessible resource to Atlantic Canadians, providing personalized advice to navigate financial difficulties with informed strategies,” says Aylward.

MNP’s national team of Licensed Insolvency Trustees offers free consultations to help severely indebted Atlantic 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.

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 MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.

Now in its twenty-ninth wave, the Index decreased to 85 points, down six points since last quarter. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between June 6 and June 11, 2024. 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.