MNP Consumer Debt Index drops six points, reflecting Canadians’ worsening debt outlook despite recent interest rate cut

• Two-thirds say they desperately need interest rates to go down (66%).
• More than half express concern that interest rates may not decline quickly enough to provide the financial relief they need (56%).
• Nearly three in five say interest rates will need to drop much further before their financial situation significantly improves (57%).
• Almost half agree they are still concerned with their ability to repay their debts, even if interest rates decline (47%).

CALGARY, AB – July 22, 2024 – The MNP Consumer Debt Index has dropped to 85 points, down six points from the previous quarter. This decline signals increasingly negative debt perceptions despite the recent interest rate cut by the Bank of Canada. More than half of Canadians express concern that interest rates may not fall quickly enough to provide the financial relief they need (56%). More than half say interest rates will need to drop much further before their financial situation significantly improves (57%) and two-thirds (66%) say they desperately need interest rates to go down. 

“Canadians may have hoped for a more significant cut to interest rates or to experience a quicker impact from the reduction. This leaves many individuals feeling disheartened,” says Grant Bazian, president of MNP LTD, the country’s largest insolvency firm. “With the prices of many daily necessities still high, many have not seen the meaningful decrease in their monthly expenses needed to ease their financial burdens." 

After two years of aggressive interest rate hikes, almost two-thirds (65%) of Canadians say high interest rates have had a negative impact on their household finances. Nearly half (47%) agree they are still concerned with their ability to repay their debts, even if interest rates decline. Notably, a third (34%) feel they are so heavily in debt that even lower interest rates would offer little relief.  

“Some individuals are living paycheque to paycheque, struggling to make ends meet and cover day-to-day necessities. Others are so deeply indebted that their financial challenges won’t be manageable, regardless of interest rates,” says Bazian. 

Consistent with last quarter, nearly half (46%) of Canadians are $200 or less away from failing to meet all their financial obligations. Three in 10 (29%, -2 pts) say they already can’t cover their bills and debt payments. Among those who feel overwhelmed by debt and doubt the effectiveness of lower interest rates, three in five (62%) are either insolvent or on the brink of insolvency. 

“Those facing these challenges should consider seeking assistance from a Licensed Insolvency Trustee, who can offer an unbiased assessment of their financial situation and explore personalized debt relief options,” says Bazian. 

Debt perceptions have significantly declined this quarter, following improvements in March 2024. When asked to reflect on their current debt situation compared to one year ago, fewer perceive their current debt situation to be better (23%, -4 pts), while more (19%, +3 pts) rated it as much worse. Nearly two in five (37%, +2 pts) are concerned that they or someone in their household could lose their job, increasing two points since last quarter. 

“Those struggling with debt often feel overwhelmed by guilt and embarrassment due to the stigma that still surrounds this issue. It's important to recognize that debt is not solely a personal failing and numerous external factors can lead to unmanageable debt, including job loss and the high costs of servicing debt — especially credit cards. The increasing prices of basic necessities, rising mortgage payments and rental costs, emergency expenses like car or home repairs, and unexpected changes in income also contribute to rising debt,” explains Bazian. 

Canadians with an income of $40,000 or less are significantly more likely to say they have accumulated so much debt that lower interest rates won’t provide much relief. Nearly three in five (57%, +3 pts) say they will be in financial trouble if interest rates rise, increasing three points since last quarter. About two in five intend to save more (45%) or accelerate their debt repayment (36%) if interest rates drop in the next three months, potentially counting on interest rate cuts to improve their financial situation. However, nearly three in 10 (29%) believe that declining interest rates won’t affect them in any way. 

“The data tells us that many Canadian households will need support to help manage their debt payments over the coming months, regardless of interest rates,” says Bazian. “Licensed Insolvency Trustees are an accessible resource for Canadians, offering personalized guidance to help navigate financial uncertainties with informed strategies.” 

MNP’s national team of Licensed Insolvency Trustees offers free consultations across the country to help severely indebted Canadians get unbiased debt advice, understand their rights, and determine the best path forward. Licensed Insolvency Trustees are the only federally regulated debt professionals who can assist with all the debt relief options, including Consumer Proposals and Bankruptcy, stop harassment from debt collectors, and discharge people from debt.  

About MNP LTD 

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 offices from coast to coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do-it-Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3-Minute Debt Break Podcast.  

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, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.  

Now in its twenty-ninth wave, the Index decreased to 85 points, down six points since last quarter. Visit MNPdebt.ca/CDI to learn more. 

The data was compiled by Ipsos on behalf of MNP LTD between June 6 and June 11, 2024. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.