Six in 10 Albertans concerned about impact of rising interest rates

• Half say (49%) they will be in financial trouble if rates rise, 35 percent say rising rates could move them towards Bankruptcy.
• Nearly half (48%) believe feeding their family has already become less affordable.
• One quarter (25%) say they do not have a solid understanding of how interest rates impact their financial situation.
• Eight in 10 (82%) say they will be more careful with how they spend their money with interest rates rising.

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ALGARY, AB – February 22, 2022 – As the country inches closer to the Bank of Canada’s next interest rate announcement on March 2, 2022, many Alberta households stretched thin by rising costs of living over the COVID-19 pandemic will be bracing for a potentially challenging year ahead. Six in 10 Albertans (60%, unchanged from September) are concerned about the impact of rising interest rates on their financial situation, according to a recent poll conducted by Ipsos on behalf of MNP LTD.

Six in 10 also say they are more concerned about their ability to repay their debts than they used to be (60%, +3pts) — while half worry they will be in financial trouble if interest rates go up much more (49%, +2pts). Thirty-five percent (+1pt) agree rising interest rates could move them toward Bankruptcy.

“Albertans are concerned about how they would cope with an interest rate increase as we near what is likely to be the first of several rate hikes in 2022,” says Donna Carson, a Licensed Insolvency Trustee with Alberta-based MNP LTD. “Those who have piled on credit to get by and can’t pay down the debt are the most vulnerable. Many Albertans are already finding it less affordable to feed their families or pay for things like housing, and the weight of additional debt servicing costs will apply more pressure.”

With the price of goods and services rising rapidly, Albertans are finding many areas of their day-to-day lives have become less affordable over the past year — including feeding themselves or their family (48%), putting aside money for savings (54%), clothing and other household necessities (43%), transportation (41%), housing (36%), and putting money towards paying down debt (38%). Half (49%) say between three to six of these areas of their lives have become less affordable.

Further evidence of affordability concerns, eight in 10 (82%) say they will be more careful in how they spend their money with interest rates rising. While down six points since September, this number remains just above the national average.

“Some Albertans have taken notice of the conversation around impending interest rate increases and are adjusting their mindset accordingly — and we do find that promising,” says Carson. “Yet there is also a lack of financial literacy among Albertans that impacts our findings, because we know many still don’t fully understand how interest rate increases will affect their own financial situation.”  

With many predicting gradual rate hikes throughout 2022, significantly more Albertans (25%, +6pts) say they do not have a solid understanding of how interest rates impact their financial situation. Compared to the other provinces, Albertans are the most likely (27%, unchanged) to say they are concerned about their ability to absorb an interest rate increase of one percentage point.

“The hope is anyone who is already struggling with their finances, or anticipates some financial difficulties on the horizon, will seek professional guidance to help manage their debt — particularly in a higher rate environment,” says Carson.

Anyone can obtain a free and confidential assessment of their financial situation with a Licensed Insolvency Trustee at MNP LTD. As the only government-regulated debt professionals, Licensed Insolvency Trustees provide a full range of debt-relief options, including Consumer Proposals, informal debt settlements and Bankruptcies. With specialized debt training and education, Licensed Insolvency Trustees take a customized approach to determine the most suitable debt-relief options. 

Other key poll highlights include:

• Nearly half (52%, +7pts) of Albertans say they are already beginning to feel the effects of interest rate increases.
• Seven percent say they will renew their mortgage in the next year.
• Three in 10 (31%) say they have only paid the minimum balance on a credit card or personal line of credit.
• Nearly two in 10 (16%) say they have borrowed money they could not afford to pay back quickly.
• One-quarter (26%) of Albertans rate their financial situation as ‘poor’, more than any other province.

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 December 1-7, 2021. 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.

A summary of some of the national data is available by request.