Report: More than half of British Columbians are concerned about the impact of interest rates on their financial situation

2022-10-24  5 minute read

Linda Paul

Lifestyle Debt

Eight in 10 agree that with interest rates rising they will be more careful with how they spend their money

VancouverGastownAtNight

VANCOUVER, BC – October 24, 2022 – As another Bank of Canada interest rate announcement looms, a recent poll conducted by Ipsos on behalf of MNP LTD finds that more than half of British Columbians (56%) are concerned about the impact of rising interest rates on their financial situation.

“After the repeated interest rate hikes this year, and the potential of more to come, it’s understandable that more than half of British Columbians are worried about the impact on their finances,” says Linda Paul, a Licensed Insolvency Trustee with MNP LTD in the Lower Mainland.

Paul says those who are financially vulnerable and struggling to make ends meet may not be able to cut back their budgets any further if rising interest rates continue to make their debts more unaffordable.

“Households in B.C. have already slashed their expenses and shaved off as much as they can from their budgets. Any future interest rate hikes could push many to take on additional debt to keep up with their bills. The cost of servicing that debt will also become more expensive as rates rise, making it even tougher to pay back,” explains Paul. “Those who are using credit to pay off their other debts should seek professional help from a Licensed Insolvency Trustee before their finances spiral beyond their control.”

While Licensed Insolvency Trustees can administer debt-relief options including Consumer Proposals and Bankruptcy, they’re also qualified to provide valuable personalized debt advice to individuals who are struggling to budget for their bills and debt repayment obligations. Additionally, Licensed Insolvency Trustees can help individuals reduce their debts through an informal debt settlement, a voluntary arrangement negotiated between an individual and their creditors, which will help put them in a better financial position as the cost of borrowing continues to rise.

Paul adds that many can think about making small budget changes to give themselves some breathing room.

“Sometimes, those smaller expenses on your credit card can go unnoticed, but they can really add up. Your monthly subscriptions such as TV streaming, apps, music, and cloud services can be sneaky,” says Paul. “Always look over your bills at the end of each month with a critical eye to those recurring monthly expenditures, and cut down on costs where you can. Cut back by cancelling subscriptions you rarely or no longer use, and check to see if you have any overlapping services you can remove. Keep a close eye on any trial offers and set reminders to cancel before you’re charged or the pricing goes up.”

Most British Columbians (84%, +1pt) agree they will be more careful with how they spend their money with interest rates rising.

As British Columbians tighten their budgets, a quarter (26%) say they’re better equipped to absorb an interest rate increase of one percentage point than they used to be, up six points from last quarter. Meanwhile, British Columbians are the least likely to say (13%) say their ability to deal with this increase has worsened, dropping by 13 points from last quarter — the largest decrease amongst the provinces. There was a small improvement in the number who say their ability to absorb an interest rate increase of an extra $130 is much better (25%, +3pts), and far fewer say it is much worse (24%, -7pts).

“More British Columbians believe they are in a better place to deal with an interest rate increase than last quarter, but we should recognize that they are still in the minority. Many may not fully understand how a rate increase can impact their finances,” says Paul. “Anyone who is already having difficulty meeting all of their debt repayment obligations should seek professional guidance to deal with their debt load.”

While the majority of British Columbians are more conscious of their spending, six in 10 (60%, +1pt) say they’re already beginning to feel the effects of interest rate increases. British Columbia was the only province to see an increase since last quarter. Approximately one in five (19%) say they don’t have a solid understanding of how interest rate increases impact their financial situation.

The proportion of British Columbians who say they are more concerned about their ability to pay their debts as interest rates rise has remained relatively stable, at 51 percent (-2pts). Also remaining stable since last quarter, half (48%, -1pt) say they will be in financial trouble if interest rates go up much more. A third (36%, -5pts) say rising rates could drive them closer to Bankruptcy — a modest improvement since last quarter.

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 Survey

The data was compiled by Ipsos on behalf of MNP LTD between September 6 to September 13, 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.