Three In Ten Canadians Say Low Interest Rates Have Caused Them To Take On More Debt Than They Otherwise Would Have

2017-04-13   minute read

Grant Bazian

MNP Consumer Debt Index

Looking ahead to Bank of Canada’s (BOC) interest rate announcement:Thirty-one per cent say they will be comfortable taking on more debt if rates decreaseHalf 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, Canadian’s appetite for cheap credit is being highlighted by a new Ipsos survey conducted on behalf of MNP Debt. Nearly thirty per cent of Canadians 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 three in ten will be comfortable increasing their debt load even more if interest rates go down. Six in ten say they will be more comfortable with their debt load if interest rates decrease. Grant Bazian, President at MNP Debt, is stepping up his warnings to Canadians about taking on more debt. “We need to change the unquestioned attitude that living with consumer debt is normal. Don’t borrow what is accessible. Only borrow what you know you can afford even when rates go up,” says Bazian who leads a nationwide team of Licenced Insolvency Trustees in over 200 MNP Debt offices across the country. Thirty per cent of survey respondents say that their borrowing capacity has grown in the last year and within this group, nearly four in ten say that they are more free with their spending as a result. “This care-free attitude toward borrowing and spending is worrisome. So many people have become accustomed to using credit to finance lifestyles they can't afford,” warns Bazian. “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 Canadian's vulnerability to interest rate increases with half of respondents indicating that they will be more concerned about their ability to pay their debts if rates go up. One in three say they are concerned that rising interest rates could move them towards bankruptcy. Other key poll highlights include: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.​ 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.​

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