Three In Ten Albertans Say Low Interest Rates Have Caused Them To Take On More Debt Than They Otherwise Would Have
Looking ahead to Bank of Canada’s (BOC) interest rate announcement:
- One in three Albertans say they will be comfortable taking on more debt if rates decrease
- More than half say they will be more concerned about their ability to pay their debts if rates increase
Calgary, AB – As the nation awaits the Bank of Canada’s next announcement on interest rates, Albertans’ appetite for cheap credit is being highlighted by a new Ipsos survey conducted on behalf of MNP Debt. Nearly three in ten Albertans say that the current low interest-rate environment has caused them to take on more debt than they otherwise would have.
While some blame low interest rates for their borrowing binge, the survey revealed that one in three Albertans will be comfortable increasing their debt load even more if interest rates go down. More than half say they will be more comfortable with their debt load if interest rates decrease.
Calgary-based Donna Carson, a Licensed Insolvency Trustee with MNP Debt, is stepping up her warnings to Calgarians about taking on more debt.
“Don’t borrow what is accessible. Only borrow what you know you can afford even when rates go up,” says Carson.
One in four survey respondents say that their borrowing capacity has grown in the last year and within this group, one in three say that they are more free with their spending as a result.
“The results show a care-free attitude toward borrowing and spending. Those who are subsidizing their income with credit are in a precarious position,” warns Carson. “Consumers must start paying down debt now while interest rates are low. It will get more expensive – and for some it will be unaffordable – when interest rates rise.”
The survey underscored Albertans’ vulnerability to interest rate increases with more than half of respondents indicating that they will be more concerned about their ability to pay their debts if rates go up. Four in ten say they are concerned that rising interest rates could move them towards bankruptcy.
Other key poll highlights include:
- Half (52%) of Canadians agree they will be more concerned about their ability to pay their debts than they currently are if interest rates rise. One in three (35%) say they are concerned that rising interest rates could move them towards bankruptcy.
- Six in ten (59%) Canadians agree that if interest rates decrease, they will be more comfortable with their debt load. For some, this sense of ease brought on by lower interest rates extends to taking on even more debt than they already have: three in ten (31%) Canadians agree that if interest rates decrease, they will be more comfortable with increasing their debt load.
- Nearly three in ten (28%) Canadians say that the current low interest-rate environment has caused them to take on more debt than they otherwise would have.
- Residents of Ontario (34%) and the Prairies (34%) are most likely to agree that the current low-interest environment has caused them to take on more debt than they otherwise would have done, as do nearly three in ten residents of Alberta (27%) and Atlantic Canada (27%), one in four Quebecers (24%) and just 16% of British Columbians.
- Some will take this a step further, saying they will feel comfortable increasing their debt load in light of a potential rate decrease: About one in three residents of Alberta (35%), Atlantic Canada (35%), Ontario (34%) and Saskatchewan and Manitoba (33%) agree, as do 27% of Quebecers and 22% of British Columbians.
- The prospect of rising interest rates is prompting more concern in some parts of Canada than others. Six in ten Atlantic Canadians (61%) and Ontarians (59%) agree that if interest rates rise, they will be more concerned about their ability to repay their debts than they are now – ahead of those in Alberta (55%), Quebec (48%), Saskatchewan and Manitoba (43%) and B.C. (38%).
- Concern about rising interest rates triggering a move toward bankruptcy is also more pronounced in Atlantic Canada (46%), followed by Ontario (39%), Alberta (39%), Quebec (35%), the Prairies (30%) and B.C. (20%).
- In every province but B.C., more than half say that if interest rates drop still further, they will feel more comfortable with their debt load: seven in ten Atlantic Canadians (71%) agree, as do 62% of Ontarians, 59% of Quebecers, 56% of Albertans, 55% of Prairie residents and 45% of British Columbians.
About MNP Debt
MNP Debt, a division of MNP LLP, is one of the largest personal insolvency practices in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working collaboratively with individuals to help them recover from times of financial distress and regain control of their finances. With more than 200 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit www.MNPdebt.ca to learn more.
About the Survey
These are some of the findings of an Ipsos poll conducted on behalf of MNP Debt between March 27 and March 30, 2017. For this survey, a sample of 1,500 Canadians from Ipsos' online panel was interviewed online. 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 +/ - 2.9 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.
