Rising interest rates and inflation forcing Ontarians to make tough budget decisions to make ends meet

More than a quarter will cut back on essentials such as food, utilities and housing; nearly half will cut back on non-essentials such as travel, dining out, and entertainment

• Six in 10 say they’re already feeling the effects of interest rate increases (60%, +7pts).
• Nearly half say they’re cutting back on non-essentials such as travel, dining out, and entertainment (45%).
• Nearly two in five are buying cheaper versions of everyday purchases (38%).
• Two in five are driving less (41%), more than any other province.
• More than a quarter are cutting back on essentials such as food, utilities, and housing (27%).
• Six in 10 are concerned about their ability to cover all living / family expenses in the next year without going further into debt (60%, +3pts), more than any other province.

TORONTO, ON – July 11, 2022 – Ontarians are becoming acutely aware of how rising interest rates and inflation impact their household budgets, as both continue on their months-long upward trajectory. Increasing a staggering seven points since last quarter, six in 10 (60%) Ontarians say they're already feeling the effects of interest rate increases, according to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos on behalf of MNP LTD.

Many Ontarians are now facing tough budget decisions to make ends meet, with nearly half saying they're cutting back on non-essentials such as travelling, dining out, and entertainment (45%). Nearly two in five are buying cheaper versions of everyday purchases (38%). Two in five Ontarians are driving less (41%), the largest proportion amongst the provinces. More than a quarter (27%) are making the difficult decision to cut back on essentials such as food, utilities, and housing. Only one in 10 (11%) don’t have any increased expenses to pay for.

"Households throughout Ontario are cutting costs and adjusting budgets to keep up with their monthly bills. But the cost of living is likely to get worse before it gets better. Households will have to make even more difficult choices about what to cut, and some may take on more debt to make ends meet," says Caryl Newbery-Mitchell, a Licensed Insolvency Trustee with MNP LTD in Toronto. "There is no reprieve; everywhere Ontarians look, life is more expensive. Housing is more expensive; driving a car is more expensive; food is more expensive."

As further indication that Ontarians could be in for a rough rest of the year, compared to the other provinces, they're the most likely to be concerned about their ability to cover all living / family expenses in the next year without going further into debt (60%, +3pts). Almost a quarter (24%) say they're not prepared to deal with an interest rate increase of one percentage point, and about six in 10 say they're concerned about the impact of rising interest rates on their financial situation (58%) — both up two points from last quarter. The proportion who are concerned about the impact of rising interest rates is up 17 points since June 2017.

Nearly six in 10 (57%, -5pts) say they will be in financial trouble if interest rates go up much more. Although this proportion has dropped five points since last quarter, it remains well above the national average. One in three (35%, -4pts) say rising rates could drive them closer to Bankruptcy.

"Ontarians who don’t think they can absorb further interest rate increases are likely to face even more as they struggle to cover the rising costs of their debt repayment obligations. With inflation nearing a 40-year high, the pressure is building for more aggressive interest rate hikes to get it under control," says Newbery-Mitchell.

While the vast majority of Ontarians (81%, +1pt) agree they'll be more careful with how they spend their money with interest rates rising, more than half (54%, unchanged) say they are more concerned about their ability to pay their debts. Two in five are concerned about their current level of debt (39%, -2pts) and say they regret the amount of debt they've taken on in life (41%, -4pts).

Newbery-Mitchell advises those concerned about upcoming bills and debt repayments to speak with a federally-regulated Licensed Insolvency Trustee who can help determine the best debt-relief solution through a confidential and unbiased assessment of their financial situation.

"Budgeting alone may not be enough to help many individuals avoid financial difficulty," says Newbery-Mitchell. "Licensed Insolvency Trustees are the only debt professionals who can provide the full range of debt-relief options to release individuals from their debts, including Consumer Proposals and 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 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 twenty-first wave, the Index has increased three points since last quarter to 90 points, although remaining well below its benchmark score established five years ago. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between June 6 and June 9, 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 erro, and measurement error.

A summary of some of the national data is available by request.