MNP Debt Index Improves Despite Future Debt Concerns

Toronto, ON, October 18, 2023 — The MNP Debt Index has improved slightly to 86 points, up 3 points this quarter, but remains below the five year average. Canadians are feeling marginally better about their personal finance when it comes to interest rates, and they are less likely than they were before to regret their debt (45%, -7 pts). However, many remain skeptical about their ability to manage their debt. As the Bank of Canada key interest rates sits at 5% as of September 2023, Canadians are nervous about what the future holds for their debt situation.

Half (51%) of Canadians Remain Close to the Edge

More than half (51%, -1) of Canadians report that they are $200 away or less from not being able to meet all of their financial obligations, including three in 10 (31%, -4) who say they already don’t make enough to cover their bills and debt payments. While insolvency attitudes remain relatively consistent, the average amount of money that Canadians have left over at the end of the month has dropped significantly to $674, down $97 from the previous quarter, as inflation puts the squeeze on Canadians from coast to coast. 

Younger Canadians aged 18-34 ($618, -$241), males ($791, -$194) and those with $100K+ household income ($1163, -$309) had the greatest decline in month-end cash. Those unaware of the impacts of interest rates on their personal finance have less left over at the end of the month ($512) compared to those who are aware of interest-rate impacts ($712).

Current Debt Concerns Abate, Slightly

Canadians’ net personal debt rating has remained consistent at 18 points, a one-point increase from last quarter. While over a third of Canadians rate their personal debt situation as ‘excellent’ (38%, +2), two in 10 Canadians rate their personal debt as ‘terrible’ (20%, +1).

Compared to last quarter, Canadian households are less concerned with their financial situation as fewer say they regret the amount of debt they’ve taken on in life (45%, -7), are concerned about their current level of debt (45%, -3), and worry about someone in their household potentially losing their job (38%. -2).

Inflation and high interest rates continue to have an impact on Canadians’ debt outlook. Canadians were asked to reflect on their current debt situation compared to one year ago, and one quarter perceive their current debt situation to be better (24%, unchanged), while more have rated their current debt situation as much worse compared to a year ago, an increase of 2 points from the previous quarter (20%). Looking into the future, Canadians were asked to forecast their expected debt situation one year from now, and fewer Canadians expect their debt situation to be better (28%, -2) and more believe it will worsen (18%, +3).

Canadians Anticipate Struggling with Future Rate Increases, but Try to Stay Positive

Canadians are continuing to feel worse about their ability to absorb interest rate increases. When asked their ability to absorb an interest rate increase of 1 percentage point, just one quarter (23%, +1) say they are much better equipped to absorb this increase than they used to be, but more (28%, +5) say their ability to deal with this increase has worsened. This question was rephrased to ask their ability to absorb an interest rate increase of an extra $130, to which a fifth (19%, unchanged) say their ability to absorb this increase is much better, while four in 10 (37%, +5) say it is much worse.

While Canadians’ ability to absorb additional interest rates has deteriorated, fewer are worried about their financial situation. Notably, fewer Canadians say they are concerned about their ability to pay their debts (62%, -4), being in financial trouble (60%, -3), or being driven towards bankruptcy (45%, -5), and fewer will be careful with how they spend their money (83%, -3), which is particularly concerning as the holiday-spending season approaches.

Consistent with last quarter, Women and Canadians ages 35-54 are most likely to agree they will be more careful with how they spend their money due to rising interest rates. Canadians ages 18-34 and 35-54 are most likely to feel the effects of interest rate increases, to be concerned with their ability to repay their debts, to feel they will be in financial trouble, and to fear that rising interest rates moving them close towards bankruptcy.

About the Study

These are some of the findings of an Ipsos poll conducted between September 5-8 2023, on behalf of MNP LTD. 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.

For more information about the MNP Consumer Debt Index, please visit mnpdebt.ca/CDI.

For more information on this news release, please contact:

Sean Simpson
Senior Vice President, Canada, Public Affairs
[email protected]

Raymond Vuong
Account Manager, Canada, Public Affairs
[email protected]

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