Newfoundlanders are among the most concerned about their ability to pay debts as interest rates rise, jumping six points since December to 68 percent

• Nearly six in 10 say they’re already feeling the effects of interest rate increases (57%, +2pts). 
• Six in 10 say they’re concerned about the impact of rising interest rates on their financial situation (64%, +7pts), more than any other province.
• Four in 10 say rising interest rates could drive them closer to Bankruptcy (43%, +6pts).
• Six in 10 report they’re $200 away or less from not being able to meet all of their financial obligations (60%, +3pts), more than any other province.
• More than half (53%, -2pts) say they’re concerned they won’t be able to cover all living / family expenses in the coming year without going further into debt, more than any other province.
  
   

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T. JOHNS, NFLD – April 18, 2022 – COVID-19’s enduring financial impact along with the pressures of rising interest rates and the increased cost of living are weighing down Atlantic Canadians’ confidence in their personal finances, according to the MNP Consumer Debt Index which is conducted quarterly by Ipsos on behalf of MNP LTD.

Impending interest rate hikes have more people worried than last quarter; four in 10 (43%) Atlantic Canadians say rising rates could drive them closer to Bankruptcy, increasing a significant six points since December. Atlantic Canadians are the most likely to say they’re more concerned about their ability to pay their debts (68%, +6pts) compared to the other provinces.

“The affordability crisis fueled by rising interest rates and cost of living is putting financial pressure on Atlantic Canadians,” says Greg Gosse, a local Licensed Insolvency Trustee with MNP LTD. 

“Many households are likely to take on more debt to keep pace with the costs of their daily expenses. But as interest rates continue to rise so will the cost of servicing some of those debts, which could make it a struggle pay them down. So begins a cycle of debt that is very difficult to break free from.”

Nearly six in 10 (57%, +2pts) Atlantic Canadians say they’re already feeling the effects of interest rate increases. Looking ahead, Atlantic Canadians are the most likely (64%, +7pts) to say they’re concerned about the impact of rising interest rates on their financial situation compared to the other provinces. The seven-point jump since December was the largest increase amongst the other provinces. Two in 10 (20%, -4pts) say they’re not financially prepared to deal with a rate increase of one percentage point. 

“Many people were forced to drain their rainy-day savings funds over the past two years,” explains Gosse. “We’re already seeing household budgets stretched to the max. It may soon become impossible for many people to cover their monthly expenses — especially those who are already living in the red — making them technically insolvent.” 

Many households could find themselves at that point within the next 12 months; six in 10 (60%, +3pts) report that they’re $200 away or less from not being able to meet all of their monthly financial obligations, more than any other province. This includes 33 percent who say they already don’t make enough to cover their bills and debt payments. While there was a marginal increase of $6 since December, the $496 the average Atlantic Canadians has left over at the end of the month remains one of the lowest in the country.

More than half of Atlantic Canadians (53%, -2pts) are concerned they won’t be able to cover all living / family expenses in the coming year without going further into debt. Nearly half are also concerned about their current level of debt (47%, -1pt) and regret the amount of debt they’ve taken on in life (46%, -2pts). 

“There is often a lot of shame and regret that comes with having excessively high debt. Stress and anxiety lead many to believe things that simply aren’t true: they’re a failure, they’re in this alone, they’re without help, or they can never be debt-free,” explains Gosse. 

“We’ve all been through so much over the past two years, including a financially devastating pandemic and related job loss. My advice to anyone struggling is don’t be too tough on yourself; take the first step and seek professional debt advice right away.”  

Licensed Insolvency Trustees are the only professionals that can offer deeply indebted individuals with debt-relief options, including Consumer Proposals and Bankruptcies. 

Gosse notes that while many people fear they will lose their house or car in a Bankruptcy, there are options to protect assets and overcome unsecured debt. By filing a Consumer Proposal, for example, an individual may be able to hold onto assets and overcome their unsecured debt through interest free payments that fit their budget. 

Both Bankruptcy and Consumer Proposals also offer legal protections to stop wage garnishments and end harassing phone calls from creditors.

“If you are trying to cover your bills with credit cards and other debt, or think you may be in that position shortly, now is the time to speak with a professional who is government licensed and can give you unbiased advice about all of your debt-relief options,” says Gosse. 

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 who are struggling with an overwhelming amount of debt each year. 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 twentieth wave, the Index has dropped one point since last quarter to 87 points, remaining at an all-time low since its inception in June 2017. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between March 9 and March 15, 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.

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