The latest MNP Consumer Debt Index conducted by Ipsos found that fully 51% of Canadians believe that the costs of living have become more difficult to manage due to interest rate increases.
Among the most predominant fears is insolvency: The proportion of Canadian households who are $200 or less away from bankruptcy increased from 40% in September 2018 to 46% at present.
Furthermore, 31% admitted that they don’t earn enough to pay for accountabilities such as monthly bills and debt payments. Nearly half (45%) lamented that they will not be able to cover for all of their expenses this year without incurring further debt.
“Many have so little wiggle room that any increase in living costs or interest payments can tip them over the edge. That’s what we are seeing happen right now,” MNL Ltd. president Grant Bazian said.
“For most, the cause of trouble appears to be long term accumulated debt. It may have been acquired over many years and they managed to pay the monthly interest until now. They just can’t carry it any longer at higher interest rates.”
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Meanwhile, only less than 2 out of 5 are confident that they are financially equipped to handle crucial life-altering events such as changes in relationship status (36%), having an illness and being unable to work for 3 months (33%), unexpected auto repairs (31%), loss of employment (30%), deaths of immediate family members (30%), or paying for one’s own or someone else’s education (29%).
“Our research continues to highlight the fact that many Canadians don’t have enough in the budget to make ends meet, let alone address their underlying indebtedness,” Bazian noted.
“Higher interest rates combined with household expenses that outweigh income mean that some are unable to make any kind of meaningful reduction in their debt and, in fact, continue to take on more especially if they encounter unexpected expenses.”