Ontarians Feeling Better About Their Debt Situation Yet Many Still Struggling

TORONTO, ON – Ontarians seem to be feeling better about their consumer debt situation and personal finances than just a few months ago, however many are still struggling, according to the latest MNP Consumer Debt Index; a quarterly survey conducted by Ipsos on behalf of MNP LTD. While half of Ontarians are still worried about their ability to repay debts (53%) or believe they could be in financial trouble (45%) if interest rates increase, those numbers have dropped by 6 points respectively since December. Significantly fewer Ontarians (31%) say an interest rate increase could move them towards bankruptcy, down 13 points.

“While we are starting to see some improvement and optimism, there still seems to be very little wiggle room in household budgets and that makes people very vulnerable to changes in interest rates or unexpected expenses,” says David Gowling, a Licensed Insolvency Trustee with MNP LTD, the country’s largest insolvency firm.

Nearly half (48%) of Ontarians say they are $200 or less each month away from financial insolvency, an increase of two points since December. This includes one in four (25%) who say they have no wiggle room at month-end, as they already don’t make enough to cover their bills and debt payments.

“This isn’t a matter of people living beyond their means. The reality is that too many households simply cannot make ends meet, however hard they try. They are essentially maxed out with no real plan for paying back what they have borrowed,” says Gowling.

While there may be red flags about where the economy and interest rates are heading, that has not stopped Ontarians from continuing to borrow. Slightly more report taking on consumer debt compared to this time last year; more than two in three (65%) say they have, up three points. What’s more, it seems many may continue to borrow, with four in ten (42%; -1pt) indicating they won’t be able to cover all living and family expenses in the next 12 months without taking on more debt.

“Credit has become an essential part of household budgets.  A whole industry has grown up around making that happen, from payday lenders to credit card companies, to buy-now-pay-later retail offers. But it is important to remember that lenders are telling you how much you can borrow, not necessarily how much you can afford,” says Gowling.

As the Bank of Canada has held interest rates steady recently, concerns among Ontarians over interest rates have softened somewhat since December. Half (48%) say they are concerned about the impact of rising interest rates on their financial situation but significantly fewer (38%) say they are concerned about their current level of debt, down 7 points.

In fact, Ontarians are somewhat optimistic about their financial future; a year from now, more than a third (38%; +2pts) expect their debt situation to improve, and five years from now, nearly half (49%; +3pts) believe their situation will improve.

While some are feeling better about their financial future, shame and guilt about debt prevents others from taking action or asking for the help that they might desperately need. “The first step is to ask for help from a licensed professional,” Gowling says.

Licensed Insolvency Trustees are the only federally regulated debt professionals empowered to provide a full range of debt relief options including consumer proposals, bankruptcies, informal debt settlements, and debt consolidation.

About MNP Debt

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 230 Canadian 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 get a free checkup for your debt health using the MNP Debt Scale.

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, follow a budget, 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. Visit MNPdebt.ca/CDI to learn more.

The latest Index data was compiled by Ipsos on behalf of MNP LTD between March 13 and March 24, 2019. For this survey, a sample of 2,070 was interviewed online. 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 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.