Rising debt and job anxiety leave Canadians struggling, with disposable income shrinking further
MNP Ltd.’s quarterly report on consumer debt reveals that half of Canadians are $200 or less away from being unable to meet their monthly financial obligations.
The report, shared by BNN Bloomberg, shows a growing number of Canadians worried about their debt and financial future.
Grant Bazian, president of MNP, noted that concerns persist despite recent interest rate reductions. “Despite interest rates decreasing, people are still concerned,” he said.
The survey, conducted by Ipsos, found that more than half of Canadians do not expect to manage living and family expenses over the next year without incurring additional debt.
Furthermore, one-third of respondents reported being insolvent. Women, in particular, were more likely than men to say they are $200 or less away from insolvency.
MNP’s Consumer Debt Index, which measures attitudes toward debt and bill payment abilities, dropped to its second-lowest level since its 2017 launch. Canadians’ personal debt rating also reached a record low.
Bazian attributed these trends to rising debt levels, stating, “I think that they just have so much debt and it’s just becoming harder to service.”
Bazian highlighted that Canada has one of the highest debt ratios among Western nations. “The volume of the debt is catching up to people,” he said.
Job security concerns are adding to the financial strain. Two in five Canadians expressed worry about someone in their household losing a job, a figure Bazian said is the highest recorded in the report’s history.
Statistics Canada data showed unemployment dipped slightly to 6.7 percent in December, but the overall trend remains elevated.
Bazian observed that people’s perceptions of their financial situation often reflect immediate pressures. “People react to what’s happening now as opposed to what’s happening in the future,” he explained.
He added that while economic shifts, such as interest rate changes, take time to influence daily life, they still impact consumer sentiment.
Even as the Bank of Canada reduced its key interest rate to 3.25 percent after five cuts last year, Canadians’ financial buffers continue to erode.
Respondents reported having almost 16 percent less disposable income at the end of the month compared to the previous quarter. Many feel unprepared for unexpected financial events, including job losses or major expenses.
Bazian emphasised the growing pessimism among Canadians. “We’re still having a growing number of people anticipating that their financial situation will worsen, that they’re going to have a harder time paying off their debt in the future,” he said.
