Report: Six in 10 Ontarians are concerned about the impact of interest rates on their financial situation

2022-10-24  4 minute read

Caryl Newbery-Mitchell

Lifestyle Debt

Over half say they’re more concerned about their ability to pay their debt as interest rates rise

Toronto skyline at sunset with reflection of skyscrapers in the water

TORONTO, ON – 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 six in 10 Ontarians (59%, +1pt) say they’re concerned about the impact of rising interest rates on their financial situation. Over half (56%) also say they’re more concerned about their ability to pay their debts as interest rates rise, inching up two points since last quarter.

“Following the repeated interest rate increases so far this year, it‘s understandable that Ontarians are more concerned about the impact on their finances,” says Caryl Newbery-Mitchell, a Licensed Insolvency Trustee with MNP LTD in Toronto.

Newbery-Mitchell says those who are financially vulnerable and struggling to make ends meet may not be able to cut back their budgets any further if interest rate increases continue to make their debts more unaffordable.

“Many households have already done their best to cut their budget and shave down expenses. Any future interest rate increases could push them to take on additional debt just to make ends meet. However, that debt can become difficult to pay off because the cost of servicing it also balloons as interest rates rise,” explains Newbery-Mitchell. “Individuals in that position should seek professional help from a Licensed Insolvency Trustee before their debt snowballs.”

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. Licensed Insolvency Trustees can also 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.

Newbery-Mitchell adds that many might consider small budgetary changes to give themselves some breathing room.

“Monthly subscriptions and other smaller expenses can be sneaky and really add up on your credit card bill. Those might include TV streaming, music, apps, and cloud services,” says Newbery-Mitchell. “If you need to cut back, start by cancelling subscriptions you no longer or don’t often use. Then check to see if you’re paying for any overlapping services to cut down where you can. And keep an eye on trial offers; set reminders to cancel before you’re charged or the pricing goes up. The key is to take a critical look at your bills each month to make sure those recurring monthly expenditures don’t go unnoticed.”

Most Ontarians (84%, +3pts) agree they will be more careful with how they spend their money with interest rates rising.

As Ontarians tighten their budgets, a quarter (25%, unchanged) say they’re better equipped to absorb an interest rate increase of one percentage point than they used to be. Meanwhile, about a fifth (17%, -7pts) say their ability to deal with this increase has worsened, dropping seven points since last quarter. One in five (23%,-1pt) say their ability to absorb an interest rate increase of an extra $130 is much better, and more than a quarter (27%) say it is much worse, dropping four points.

Yet while the majority are more conscious of their spending, nearly six in 10 (58%, -2pts) say they’re already beginning to feel the effects of interest rate increases.

“Ontarians who believe they’re better prepared for an interest rate increase are still in the minority. Many may not understand the full impact of a rate increase on their financial situation,” says Newbery-Mitchell. “Anyone already having difficulty meeting all of their debt repayment obligations should seek professional guidance to deal with their debt.”

Approximately one in five Ontarians (23%) say they don’t have a solid understanding of how interest rate increases impact their financial situation. While fewer Ontarians than last quarter say they will be in financial trouble if interest rates go up much more, half (49%, -8pts) still fear that will be the case. A third (35%, unchanged) say rising rates could drive them closer to Bankruptcy.

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 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 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 and 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.