Canadians remain concerned about their debt levels amid higher interest rates, a new report has found, with half expecting that economic circumstances will deteriorate further and that “the worst is yet to come.”
That’s according to MNP’s quarterly Consumer Debt Index released Tuesday. While the Index rebounded from an all-time record low last quarter, rising 12 points to 89 points, Canadians are still worried about their indebtedness. Nearly half (46 per cent) said they are concerned with their current levels of debt (down from 47 per cent), and more than half (57 per cent) said if interest rates go up they will be in financial trouble (down from 59 per cent).
When asked about the impact of the current economic conditions, one third (35 per cent) said that Canada is currently in the worst part of the economic cycle while half (50 per cent) said they believe “the worst is yet to come.”
“Facing inflation as well as sharply higher interest rates on their outstanding debts, deeply indebted Canadians may be rightfully feeling that the worst is yet to come,” MNP president Grant Bazian said in a statement.
The survey, which is conducted by Ipsos and tracks Canadians’ attitudes towards their debt situation, also found that 46 per cent of Canadians feel they are on the brink of insolvency.
Canadians have less money left over at the end of the month as inflation weighs on household budgets. The average amount of money households have leftover fell $64 from the previous quarter to $787, the survey found.
Still, with the Bank of Canada hitting pause on its aggressive interest rate hiking cycle, the survey found some respondents are feeling a slight reprieve
The number of Canadians who say they are confident with their ability to cover all living expenses without going into debt is up 4 percentage points to 55 per cent.
“The results reveal a more positive financial outlook among Canadians, although confidence remains lower than levels recorded in 2021 and earlier,” Bazian said, adding that it is “a reflection of the lingering concerns many have surrounding inflation and interest rates.”