Almost half of Canadians concerned about debt following 10-point jump in survey index
Observers and economic experts have long been raising concerns about the vulnerabilities Canada faced from household debt. And as safety measures continue to stifle business and economic activity across the world, the weaknesses have become more apparent than ever to households facing unprecedented stress.
In the latest MNP Consumer Debt Index conducted by Ipsos for MNP LTD, almost half of responding Canadians (46%) said they are concerned about their current debt levels. The result represents a 10-point jump over the previous poll done in December, and the highest percentage ever recorded in the survey’s history.
“Our results underscore how vulnerable Canadian households are to income interruption,” MNP LTD President Grant Bazian said. “Over the next few months, we’ll likely see an unfolding of two crises: the global pandemic and the bursting of the Canadian consumer debt bubble.”
With the global pandemic spreading pain across the world, the survey found that around a third of Canadians (34%) are worried that either they or a member of their household could lose their employment, 7 points up from December. Around the same percentage (30%) said they’re not confident they can financially cope with a loss of employment, changes to wages, or seasonal work with taking on more debt.
“The ability of many households to face any kind of financial disruption was already limited [prior to the COVID-19 crisis],” Bazian said. “Those who were already saddled with a lot of debt are in economic survival mode.”
Forty-nine per cent (49%) of Canadians said they are $200 or less away from being unable to settle all their bills every month, including 25% who said they’re already behind on their debt obligations on a monthly basis.
While borrowers might take some comfort from lower interest rates, monetary policy interventions, and lenders providing flexibility in deadlines, Bazian encouraged indebted households to find support through the right channels.
“[T]he important thing is not to panic when it comes to your finances during this time,” he said, urging people to resist running up their debt or panic buying. “Focus on the necessities. If you are in danger of missing any payments, communicate with your creditors right away and seek debt advice from a licensed professional.”
