Report: More than half of Quebecers are concerned about the impact of rising interest rates on their financial situation

Eight in 10 say they will be more careful with how they spend their money with interest rates rising

MONTREAL, QC – October 24, 2022 – As another Bank of Canada interest rate announcement looms, a recent poll conducted by Ipsos on behalf of MNP LTD finds that eight in 10 Quebecers (82%, +2pts) agree they will be more careful with how they spend their money as borrowing costs rise, increasing two points from last quarter. More than half of Quebecers (54%, unchanged) say they’re concerned about the impact of rising interest rates on their financial situation.

“Following the repeated interest rate hikes this year, and with over half of Quebecers still concerned about the impact of rate increases on their finances, it’s encouraging to see more Quebecers are being conscious of their spending,” says Frédéric Lachance, a Licensed Insolvency Trustee with MNP LTD in Montreal.

As Quebecers tighten their budgets, far fewer (45%) say they are more concerned about their ability to pay their debts as interest rates rise, dropping a significant 10 points since last quarter and reaching the lowest proportion amongst the provinces. Also dropping since last quarter, Quebecers are the least likely to say they will be in financial trouble if interest rates go up much more (44%, -4pts) and that rising rates could drive them closer to Bankruptcy (32%, -9pts).

Far more Quebecers (26%, +6pts) than last quarter say they’re better equipped to absorb an interest rate increase of one percentage point than they used to be — and fewer (14%,-8pts) say their ability to deal with this increase has worsened. When asked about their ability to absorb an interest rate increase of an extra $130, a quarter (25%, +11pts) say their ability to absorb this increase is much better, while one in three (22%) say it’s much worse, down 11 points from last quarter.

“Compared to last quarter, more Quebecers believe they’re better prepared for an interest rate increase, but these individuals are still in the minority. The fact remains that many are already unable to meet all of their repayment obligations or don’t understand exactly how interest fluctuations affect their monthly expenses and debt repayments,” says Lachance.

Although it’s the lowest proportion amongst the provinces, nearly half of Quebecers still say they’re already beginning to feel the effects of interest rate increases (48%, -2pts). At the same time, one in five (20%) say they don’t have a solid understanding of how interest rate increases impact their financial situation.

Lachance says those who are financially vulnerable and struggling to make ends meet may not be able to reduce their spending any further if interest rates continue to rise and make their debts more unaffordable.

“For individuals that have already cut their budgets and slashed as many expenses as they can, any future interest rate hikes could force them to take on more debt to make ends meet. The problem is the cost of servicing that debt also grows as rates rise, making it even harder to pay down,” explains Lachance. “Those who find themselves in that position should seek out professional debt help from a Licensed Insolvency Trustee before their debt continues to spiral.”

While Licensed Insolvency Trustees can administer debt-relief options including Consumer Proposals and Bankruptcy, they’re also qualified to provide valuable personalized debt advice to individuals who are struggling to budget for their bills and debt repayment obligations. Additionally, Licensed Insolvency Trustees can help individuals reduce their debts through an informal debt settlement, a voluntary arrangement negotiated between an individual and their creditors which will help put them in a better financial position as the cost of borrowing continues to rise.

Lachance adds that many might consider making small budget changes to give themselves some breathing room.

“Smaller expenses on your credit card can often go unnoticed ­— but they really add up. For example, monthly subscriptions including TV streaming, apps, music, and cloud services can be sneaky,” says Lachance. “Try to cut back by cancelling subscriptions you rarely or no longer use, and check in to see if you have any overlapping services you can remove. Keep an eye on trial offers and set reminders to cancel before you’re charged, or the pricing goes up. Make sure to look over your bills each month with a critical eye so you can keep those recurring monthly expenditures in check and cut down on costs where possible.”

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 Survey

The data was compiled by Ipsos on behalf of MNP LTD between September 6 and September13, 2022. 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.

Provincial data is available upon request.