More than half of Ontarians say interest rates will need to drop much further before their financial situation significantly improves

• Three in five say they desperately need interest rates to go down (63%).
• More than half express concern that interest rates may not decline quickly enough to provide the financial relief they need (54%).
• Two in five agree they are still concerned with their ability to repay their debts, even if interest rates decline (44%).

TORONTO, ON – July 22, 2024 – Ontarians are feeling pessimistic about their personal finances this quarter, despite the recent interest rate cut by the Bank of Canada. The MNP Consumer Debt Index finds more than half of Ontarians express concern that interest rates may not fall quickly enough to provide the financial relief they need (54%). More than half say interest rates will need to drop much further before their financial situation significantly improves (53%), and three in five (63%) say they desperately need interest rates to go down.

“Ontarians may have hoped for a more significant interest rate cut or to experience a quicker impact from the reduction. This leaves them feeling disheartened by the current situation,” says Caryl Newbery-Mitchell, a Licensed Insolvency Trustee with MNP LTD in Toronto. “With the prices of many daily necessities still high, many have not felt the substantial decrease needed in their monthly expenses to ease their financial burdens."

After two years of aggressive interest rate hikes, nearly two-thirds (65%) of Ontarians say high interest rates have had a negative impact on their household finances. Two in five (44%) agree they are still concerned with their ability to repay their debts, even if interest rates decline. Notably, three in 10 (30%) feel they are so heavily in debt that even lower interest rates would offer little relief.

“Some people are living paycheque to paycheque, struggling to cover basic expenses and make ends meet. Others are burdened with such significant debt that they simply won’t be able to manage their financial challenges, regardless of interest rate changes,” says Newbery-Mitchell.

Despite the pessimism many Ontarians are feeling about their finances, some have seen a slight relief in their monthly budget this quarter. Slightly fewer are $200 or less away from failing to meet all their financial obligations, with two in five (44%, -4 pts) still finding themselves close to insolvency. While fewer this quarter say they already can’t cover their bills and debt payments, three in 10 (29%, -7 pts) remain in this position.

“Those still facing these challenges should consider seeking assistance from a Licensed Insolvency Trustee, who can offer a personalized evaluation of their financial situation and explore customized debt relief solutions,” advises Newbery-Mitchell.

Debt perceptions have declined this quarter, following improvements in March. When asked to reflect on their current debt situation compared to one year ago, fewer perceive their current debt situation to be better (22%, -4 pts), while more (19%, +4 pts) rated it as much worse. A third (35%, unchanged) are concerned that they or someone in their household could lose their job.

“Individuals grappling with debt often experience feelings of embarrassment and guilt because of the stigma associated with financial challenges. It's crucial to recognize that unmanageable debt is not merely a personal failing and can stem from various external factors, including emergency expenses like car or home repairs and high debt servicing costs — especially with credit cards. Increasing mortgage payments and rental costs, unexpected changes in income, job loss, and increasing prices of everyday necessities all contribute to rising debt,” explains Newbery-Mitchell.

More than half (54%, unchanged) of Ontarians say they will be in financial trouble if interest rates rise. Potentially counting on interest rate cuts to improve their financial situation, two in five intend to save more (43%), and a third plan to accelerate their debt repayment (35%) if interest rates drop in the next three months. However, a third (34%) believe that declining interest rates won’t affect them in any way.

“The data highlights that many households in Ontario may need support to help handle their debt payments in the months to come, regardless of interest rates. Licensed Insolvency Trustees offer accessible support to Ontarians, providing personalized advice to navigate financial uncertainties with informed strategies,” says Newbery-Mitchell.

MNP’s national team of Licensed Insolvency Trustees offers free consultations to help severely indebted Ontarians 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.