Poll reveals six in 10 Canadians concerned about effect on finances, renters and low-income households more vulnerable
A new poll conducted by Ipsos for MNP LTD, Canada’s largest insolvency firm, has found that six in ten (59%) are worried about the impact of rising interest rates on their financial status. This is the highest percentage since the survey's tracking started in 2017.
Grant Bazian, president of MNP LTD, said: “After the repeated interest rate hikes this year, it’s understandable that Canadians are more concerned than ever about the impact on their finances.”
“Our findings indicate renters and lower-income households are more financially vulnerable to the impacts of rising interest rates and the cost of living. These groups will need to be particularly cautious with their spending in the coming months to keep themselves out of financial trouble,” he added.
The survey found that renters are substantially more likely than homeowners to be concerned about how rising interest rates may affect their financial condition (34% of renters vs. 29% of owners).
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Additionally, renters are noticeably more likely than owners to be concerned about their ability to pay back their debts as interest rates rise (63% of renters vs. 48% of owners) and their financial stability (59% vs. 41% ). They were also more prone than homeowners to believe that higher rates may push them toward bankruptcy (45% vs. 27%).
Canadian respondents below the $40,000 income threshold were most likely to feel the effects of interest rate increases. They were also most prone to worry about their ability to pay back their debts, that rising rates would push them into financial trouble, and that rate hikes would bring them closer to bankruptcy.
According to Bazian, those trying to make ends meet and are financially susceptible are not likely to be able to reduce their spending any further if interest rates rise and make it harder for them to pay off their loans.
“For households that have already slashed their budgets and shaved off as many expenses as they can, any future interest rate hikes could put them in a position where they’re forced to take on additional debt to keep up with their bills. But the ballooning cost of servicing that debt also makes it far more difficult to pay off,” Bazian explained.
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Even people who are not yet at their breaking point, according to Bazian, can make little adjustments to their budgets to allow themselves some breathing room.
More than four fifths of Canadians in the survey (84%) – particularly women – said that they’ll be more careful about their spending as rates rise. With Canadians pinching pennies more than usual, a quarter (25%) said they’re better equipped than before to deal with a one-percentage point rate hike, and 21% said they’re much more able to absorb an increase equivalent to an extra $130.
“Slightly more Canadians than last quarter believe they’re better prepared for an interest rate increase, but these individuals are still in the minority. Canadians can take steps to improve their financial standing in preparation for current and future interest rate hikes,” he said.
