Nearly three in five British Columbians say interest rates will need to drop much further before their financial situation significantly improves

• Three in five say they desperately need interest rates to go down (63%).
• Nearly half express concern that interest rates may not decline quickly enough to provide the financial relief they need (48%).
• Two in five agree they are still concerned with their ability to repay their debts, even if interest rates decline (43%).

VANCOUVER, BC – July 22, 2024 – British Columbians are feeling pessimistic about their personal finances this quarter, despite the recent interest rate cut by the Bank of Canada. The MNP Consumer Debt Index finds nearly half of British Columbians are concerned that interest rates may not decline quickly enough to provide the financial relief they need (48%). Nearly three in five say interest rates will need to drop much further before their financial situation significantly improves (57%), and three in five (63%) say they desperately need interest rates to go down.

“British Columbians may have been hoping for a more substantial interest rate cut or to experience a quicker impact from the reduction, which might have been disheartening for some,” says Linda Paul, a Licensed Insolvency Trustee with MNP LTD in the Lower Mainland. “With the prices of many daily necessities still high, many have not experienced the significant drop in their monthly expenses needed to ease their financial stress.”

After two years of aggressive interest rate hikes, three in five (63%) British Columbians say high interest rates have had a negative impact on their household finances. Two in five (43%) agree they are still concerned with their ability to repay their debts, even if interest rates decline. Notably, three in 10 (31%) feel they are so heavily in debt that even lower interest rates would offer little relief.

“Some British Columbians are living paycheque to paycheque, finding it difficult to make ends meet and cover everyday essentials. Others are overwhelmed by debt to the extent that their financial challenges won’t be manageable, regardless of interest rate changes,” says Paul.

Nearly half (47%, +2 pts) of British Columbians are $200 or less away from failing to meet all their financial obligations. This includes about a quarter (24%, -5 pts) who say they already can’t cover their bills and debt payments.

“Individuals facing financial hardship should consider seeking help from a Licensed Insolvency Trustee, who can provide an unbiased assessment of their financial circumstances and explore customized debt relief options,” says Paul.

Debt perceptions have declined this quarter. When asked to reflect on their current debt situation compared to one year ago, significantly more (21%, +5 pts) rated their current debt situation as much worse. Slightly fewer perceive their current debt situation to be better (25%, -1 pt) compared to a year ago. Three in 10 (29%, unchanged) are concerned that they or someone in their household could lose their job.

“People who are struggling with debt often feel overwhelmed by guilt and embarrassment due to the stigma around this issue. It’s important to recognize that debt is not solely a personal failing, and many different external factors can contribute to unmanageable debt. This includes unexpected changes in income, job loss, and the high costs of servicing debt — particularly credit cards. Increasing prices of basic necessities, rising mortgage and rental payments, and emergency expenses like car or home repairs all contribute to rising debt,” explains Paul.

Although fewer this quarter (53%, -5 pts) say they will be in financial trouble if interest rates rise, more than half of British Columbians still feel they would be in trouble financially. Potentially counting on interest rate cuts to improve their financial situation, two in five intend to save more (43%) and a third plan to accelerate their debt repayment (33%) if interest rates drop in the next three months. However, more than a third (37%) believe that declining interest rates won’t affect them in any way.

“The data shows that many households in British Columbia will need assistance to help manage their debt payments in the coming months, regardless of interest rates,” says Paul. “Licensed Insolvency Trustees are accessible resources for support, offering personalized guidance to help British Columbians navigate financial challenges with informed strategies.”

MNP’s national team of Licensed Insolvency Trustees offers free consultations to help severely indebted British Columbians get unbiased debt advice, understand their rights, and determine the best path forward. Licensed Insolvency Trustees are the only federally regulated debt professionals who can assist with all the debt relief options, including Consumer Proposals and Bankruptcy, stop harassment from debt collectors, and discharge people from debt.

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-ninth wave, the Index decreased to 85 points, down six points since last quarter. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between June 6 and June 11, 2024. 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.