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Consumer Debt Index Update: We’re Still Pessimistic About Our Debt And Paying Bills

  • Nearly half of British Columbians anticipate having to go further into debt to cover their expenses over the next year, up twelve points since September.
  • One quarter of British Columbians say they’re concerned that rising interest rates could move them towards bankruptcy, up four points since September.
  • Half are more concerned about their ability to repay debts, up two points since September.

Vancouver – British Columbians are growing increasingly concerned about their ability to repay debts and have seen their household budgets tighten significantly since interest rates began to rise in July, according to the latest MNP Consumer Debt Index. The quarterly survey, conducted by Ipsos on behalf of MNP LTD, paints a concerning picture; one quarter (25%) of British Columbians now say that they are unable to cover their monthly bills and debt repayments, an increase of two points since the September results.

Those who are making ends meet have fewer dollars left in their pocket at the end of the month. On average, British Columbians say they are left with $802 after bills and debt obligations, which represents a seventeen per cent cut since June ($962). Four in ten (41%) British Columbians say they are within $200 of not being able to pay their bills and debt obligations, up three points since September.

“The findings demonstrate just how financially vulnerable British Columbians are; even small interest rate increases result in escalating financial strain and anxiety,” says Lana Gilbertson, a Vancouver-based Licenced Insolvency Trustee at MNP LTD, the country’s largest personal insolvency practice.

One in three (36%) British Columbians say that if interest rates go up much more, they are afraid they will be in financial trouble. In fact, financial insolvency is a real worry for many, with a quarter (26%) agreeing they’re concerned that rising interest rates could move them towards bankruptcy, an increase of four points since September.

Despite the fact that three quarters (77%) said that as interest rates rise, they’ll be more careful with how they spend their money, nearly half (49%) of British Columbians still anticipate having to go further into debt to cover their expenses over the next year, up twelve points.

“While British Columbians appear to be heeding rate increase warnings, they are still reliant on credit to make their household budgets work. With many already on the minimum payment treadmill, it’s very concerning to see that almost a majority intend to take on more debt,” says Gilbertson.

One in three British Columbians (33%) agree they are concerned about their current level of debt and four in ten (39%) regret how much debt they’ve taken on in their life. Almost sixty per cent (59%) of British Columbians do not think they’ll be debt free in retirement, up ten points since September, and thirteen points since June: the largest increases compared to the other provinces.

“For far too long, British Columbians have taken advantage of rock bottom interest rates, and many of them have financed everything in their lives – from education, to houses, to cars, and even everyday purchases – without really putting much thought into debt servicing costs. With interest rates on the rise, British Columbians will be more stretched financially than they have ever been before,” says Gilbertson.

The MNP Consumer Debt Index is the most comprehensive survey on consumer debt in Canada. It gauges Canadians’ perceived ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. The results have been compiled into Canada’s first national debt index; an aggregate measure of how Canadians feel about debt, how their debt situation has evolved in the last five years, and how they feel about their debt situation looking forward. The index has fallen by two points to 100 from 102 in September, signaling a slight worsening of debt sentiment in Canada.

 

About MNP Debt

MNP LTD, 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 220 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 contact a Licensed Insolvency Trustee.

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, follow a budget, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure /relief among Canadians. Visit www.MNPdebt.ca/CDI to learn more.

The latest Index data was compiled by Ipsos on behalf of MNP LTD betweenDecember 8th to December 13th, 2017. For this survey, a sample of 2,001 Canadians from the Ipsos I-Say panel was interviewed online. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +/- 2.5 percentage points, 19 times out of 20, of what the results would have been had all Canadian adults been polled. Credibility intervals are wider among subsets of the population. This represents the third wave of the MNP Consumer Debt Index.

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