Ontarians’ debt concerns spike, amid persistently high interest rates, inflation and affordability struggles, MNP Consumer Debt Index finds

• More than half say they regret the amount of debt they’ve taken on in life (56%) — up a record 13 points from last quarter, a record high.
• Half say they’re concerned about their current level of debt (50% +8 pts).
• Seven in 10 say they’re already feeling the effects of interest rate increases (73%, +15 pts).
• Seven in 10 say they’re more concerned about their ability to pay their debts as interest rates rise (68%, +12 pts).
• Three in five say they will be in financial trouble if interest rates go up much more (64%) — up 15 points since last quarter, the largest increase amongst the provinces

TORONTO, ON, January 16, 2023 – Ontarians’ anxiety about their debt situation is building amid rising interest rates, persistent inflation, and heightened affordability concerns. The latest MNP Consumer Debt Index finds more than half of Ontarians say they regret the amount of debt they’ve taken on in life (56%), increasing a record 13 points from the previous quarter to reach an all-time high. Additionally, more Ontarians say they’re concerned about their current level of debt (50%, +8 pts). Plunging 11 points, significantly fewer Ontarians are confident they can cover all living/family expenses in the next year without going further into debt (49%).

The MNP Consumer Debt Index is conducted quarterly by Ipsos to track Canadians’ attitudes about their debt situation and their ability to meet their monthly payment obligations. It has taken a drastic plunge to 77 points, down a record 15 points from the last quarter and marking an all-time low since the Index was created more than five years ago.

“We are seeing a significant shift in how Ontarians are feeling about their personal debt, and that mirrors the rapidly rising interest rates and persistent inflation experienced in 2022,” says Caryl Newbery-Mitchell, a Licensed Insolvency Trustee with MNP LTD in Toronto. “Many households are being hit with a double whammy. Inflation is eating away at their budgets, and on top of that, those who are overleveraged are also facing hefty increases to their borrowing costs.”

After last year’s seven interest rate increases, Ontarians are feeling significantly worse about their ability to absorb any more. Seven in 10 Ontarians (73%) say they’re already feeling the effects of interest rate increases, making a massive 15-point jump since last quarter. Spiking 12 points from last quarter, significantly more now say their ability to absorb an interest rate increase of one percentage point has worsened (29%). Two in three are more concerned about their ability to pay their debts as interest rates rise (68%, +12 pts). Jumping by 15 points since the previous quarter, three in five Ontarians say they’ll be in financial trouble if interest rates go up much more (64%) — the largest increase amongst the provinces.

Rising costs are being felt by a growing proportion of Ontarians. More than half report feeding themselves and their family (56%, +8 pts), putting money aside for savings (59%, +11 pts) and clothing or other household necessities (52%, +8 pts) are less affordable. About half say transportation (51%, +8 pts), and housing (48%, +12 pts) are becoming less affordable.

“Households are already spending nearly all their paycheque each month. There is very little wiggle room and it’s becoming near impossible for households to accommodate any further increases in expenses and debt-carrying costs. Ontarians are in a struggle to keep up their standard of living, and some will resort to taking on more debt to try to maintain the status quo,” explains Newbery-Mitchell.

Many Ontarians are already resorting to taking on more debt or reducing their monthly debt payments to make ends meet. Compared to December 2021, more say they have paid only the minimum balance on their credit card (27%, +5 pts), borrowed money they can’t afford to pay back quickly (21%, +9 pts), or paid the minimum balance on their line of credit (18%, +7 pts). One in five say they’ll use their savings to pay their bills (21%, +3 pts), while one in 10 will borrow from friends or family (14%, +6 pts) or use their credit card to pay their bills (15%, +2 pts). A third plan on reducing their discretionary spending to make ends meet (37%), up five points since last quarter.

“More individuals are being forced to make difficult financial choices to stay afloat. Amassing more debt can have lasting financial impacts though, and it can end up pushing some into a debt spiral that is hard to escape. An individual’s mental health can also be significantly impacted by these kinds of financial struggles, as they often trigger stress and anxiety,” says Newbery-Mitchell.

Compared to the other provinces, Ontarians are the most likely (48%, -1 point) to report they are $200 away or less from not being able to meet all of their financial obligations at month’s end. This includes one in three (33%, +6 pts) who say they already don’t make enough to cover their bills and debt obligations, also the highest proportion amongst the provinces.

“Be aware of any financial red flags as the holiday bills arrive this month. These may point to the need for guidance from a debt professional,” says Newbery-Mitchell. “I encourage Ontarians to seek advice from a debt professional like a Licensed Insolvency Trustee before problems worsen — especially those who are unable to cover their bills, anticipate missed payments, or plan to use other forms of credit to pay bills.”

Debt-relief options can include striking a deal with creditors through an informal debt settlement, consolidating all debts into one monthly payment, making a debt repayment plan through a Consumer Proposal, or declaring Bankruptcy.

Newbery-Mitchell explains that people often miss the initial warning signs or feel shameful about seeking help, causing the debt to snowball, and in some cases leaving the individual with fewer options.

“Each person’s debt situation is unique, which is why meeting with a Licensed Insolvency Trustee for a free, confidential financial review is the best place to start. They will walk through all of the debt relief options available and offer an expert opinion on which would provide the most permanent and cost-effective solution,” advises Newbery-Mitchell.

Licensed Insolvency Trustees are federal-regulated and are the only debt professionals in Canada who are qualified to advise on all the debt relief options available. MNP offers free consultations across Canada.

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 has 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-third wave, the Index has plunged 15 points since last quarter to 77 points, an all-time low since the MNP Consumer Debt Index’s inception more than five years ago. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between December 1 and December 6, 2022. 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.

National data is available upon request.