PEI residents feeling flush and ready to spend as concern about debt and personal finances eases post-pandemic

  • A third (32%) plan to spend more than they normally would on travel, dining, and entertainment.
  • Six in 10 (57%, -3pts) say they have taken advantage of low interest rates to make purchases that wouldn’t normally fit within their budget.
  • Far fewer report being unable to pay their monthly bills and debt repayments (24%, -6pts).

Downtown Charlottetown from above the water

CHARLOTTETOWN, PEI – July 19, 2021 – With vaccinations and business re-openings continuing apace, Atlantic Canadians are feeling flush and seeking out post-pandemic indulgences. The MNP Consumer Debt Index finds a third (32%) say they plan to spend more than normal on things such as travel, dining, and entertainment as they re-engage with the economy.

As consumer spending flows back into previously closed sectors of the economy, Atlantic Canadians are finding themselves with more money at month-end after paying their bills: Households now report having $792 left over, which is $366 more than in March and the highest level recorded since the Index was created in 2017. With more money at month-end, the quarterly poll conducted by Ipsos on behalf of MNP LTD finds far fewer report being unable to pay their monthly bills and debt repayments (24%, -6pts since March).

“Atlantic Canadians appear to be emerging from their pandemic bubbles and going into shopping malls, restaurants and airplanes to celebrate,” says Walter MacKinnon, a local Licensed Insolvency Trustee with MNP LTD. “It is understandable many want to treat themselves after months of lockdown savings, but I caution households not to erase hard-earned gains.”

While the majority (63%) report they reduced their spending during the pandemic, six in 10 (57%, -3pts) say they’ve taken advantage of low interest rates to make purchases that normally wouldn’t have fit within their budget.

“Even those who didn’t lose a job due to COVID may have made cautionary adjustments to their household budgets or changed their spending habits. As life slowly gets back to normal, the pandemic-driven money management behaviours can help households positively reshape their financial futures. Spend less, save more, and make emergency funds a priority,” says MacKinnon.

Four in 10 Atlantic Canadians feel their debt situation is better now than it was before the pandemic started (44%). They’re also feeling more secure in their living expenses, with far fewer anticipating they’ll need to take on more debt to cover all living and family expenses in the next 12 months (30%, -5pts) or feeling concerned about their ability to repay their debts (50%, -7pts).

“As debt concern wanes for many, those who went into lockdown already deeply indebted and then experienced prolonged financial disruption are perhaps even more vulnerable right now. They should not follow their neighbours’ lead and rush to return to pre-pandemic spending habits,” says MacKinnon.

He points to the survey results showing that three in 10 Atlantic Canadians feel the pandemic worsened their debt (27%) or created a larger debt burden for either themselves or their family (30%).

The survey also found homeowners with an outstanding mortgage may be at particular risk. Three in 10 (30%) Atlantic Canadians who own a home say they’re house poor, meaning they don’t have much left over after paying bills related to their home. All told, nearly 500,000 Atlantic Canadian homeowners are susceptible to financial disruptions such as an interest rate increase or change to their job situation. Perhaps it is, therefore, not surprising nearly two in 10 (16%) homeowners say they regret the amount of debt they took on to buy their home.

With lingering pandemic-related uncertainty and the potential for interest rate increases in the future, four in 10 Atlantic Canadians (39%, -1pts) are concerned they will be in financial trouble if interest rates go up much more. Three in 10 (27%) would go so far as to say that they are concerned rising interest rates could drive them towards Bankruptcy, a 15-point drop since March.

For those who are struggling with debt, MacKinnon notes Bankruptcy is not the first, nor is it always the best option. Licensed Insolvency Trustees are empowered to provide a full range of debt-relief options, including Consumer Proposals, informal debt settlements and Bankruptcy. They are the only federally regulated debt professionals and take a customized, unbiased approach to help severely indebted individuals understand their rights and determine the best path forward.

“Those feeling overwhelmed by their bills should seek professional debt advice as the first step to getting their finances back on track,” says MacKinnon. 

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 seventeenth wave, the Index currently stands at 97 points, up one point compared to the last wave conducted in March 2021. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the seventeenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between June 14-17, 2021. For this survey, a sample of 2,002 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.