Ontarians Increasingly Pessimistic About Their Ability To Absorb Higher Interest Rates And Cover Monthly Bills

2018-01-15   minute read

David Gowling

MNP Consumer Debt Index

According to a recent Ipsos poll conducted by MNP LTD., Ontarians are increasingly worried about their ability to repay their debts. Since interest rates first rose in July, households across the province have noticed their budgets tightening as they struggle to keep up with expenses and manage other rising costs. Jumping seven percent since September, one-third (32%) of Ontarians now say they are unable to cover their monthly bills and debt repayments. At the same time, nearly half (48%) say they are $200 or less from not being able to meet their monthly financial obligations.

Disposable income has also declined noticeably over the previous two Consumer Debt Index surveys. The average Ontarian notes a significant reduction in money left over after bills and debt payments since September – dropping 29 percent over the past quarter and representing by far the largest decline among any province. Decreasing from $835, households are now left with $595 to cover any irregular or unplanned costs. This has led four in ten (41%) to express concern if interest rates go up much further they may find themselves in financial trouble and one in three (33%) to worry it may move them towards bankruptcy.

While nearly 80 percent of Ontarians resolve to be more careful with how they spend their money, almost half (45%) still anticipate going further into debt just to cover basic expenses over the next year – a seven percent increase over the previous quarter. This indicates many may be stuck in a dangerous debt trap. While they're heeding warnings that credit will continue to get more expensive, rising costs mean they're struggling to cover basic expenses without relying on debt to get them through.

Reflecting on their situations, one-third (33%) of Ontarians say they are concerned about their current debt situation and nearly four in ten admit (38%) they regret how much debt they've taken on. Looking towards retirement, a five percent increase means more than half (56%) of Ontarians now doubt their ability to be debt free by the time they leave the workforce.

This all indicates rising debt costs are ramping up the financial pressure across the province. Many people took advantage of rock bottom interest rates for everything from houses and cars to everyday purchases while few put money away for emergencies. If things don't change drastically, thousands of Ontario residents could be on the verge of a significant crisis over the coming year ahead.

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 /relief among Canadians. Visit www.MNPdebt.ca/CDI to learn more.

The latest Index data was compiled by Ipsos on behalf of MNP LTD between December 8th to December 13th, 2017. For this survey, a sample of 2,001 Canadians from the Ipsos I-Say panel was interviewed online. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +/- 2.5 percentage points, 19 times out of 20, of what the results would have been had all Canadian adults been polled. Credibility intervals are wider among subsets of the population. This represents the third wave of the MNP Debt Index.

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