MNP Debt Index Rises to Highest Point as Canadians Say Their Debt Situation is Improving

Toronto, ON, July 9, 2018 — Canadians are gaining optimism when it comes to their personal debt situation, as a new Ipsos poll conducted on behalf of MNP LTD finds that the MNP Debt Index has reached an all-time high since its inception last year, driven by gains in the last three months. Since March 2018, the index has risen a significant 10 points, with the increase being attributed to an uptick in confidence in both current optimism and future outlook:

• More Canadians are confident in their ability to cope with potential life-changing events such as:
  • a change in relationship status (36%; +4pts);
  • unexpected auto repairs or purchase (35%; +7pts);
  • having an illness and being unable to work for three months (31%; +3pts),
  • a death of a family member (29%; +3pts);
  • loss of employment (29%; +3pts);
  • or paying for your own or someone else’s education (28%; +4pts).
• Canadians are feeling more in control of their current debt situation, including 27% (+3pts) who say their debt situation is better compared to a year ago, and 35% (+3pts) who say their debt has improved compared to 5 years ago.
• Looking to the future, 38% (+5pts) of Canadians expect their debt situation will improve a year from now, and 50% (+3pts) say their debt situation will improve 5 years from now.

Overall, Canadians are taking a more positive tone to their current personal debt situation, as four in ten (41%) rate their debt situation as excellent (either 8, 9 or 10 on a 10-point scale), up 5 points since March. Conversely, fewer (14%, -2 points) Canadians rate their debt situation as terrible (either 1,2, or 3 on a 10-point scale).

The boost in confidence could also be a function of the fact that fewer (44%; -2 points) Canadians are $200 or less away from financial insolvency after paying their bills and debt obligations each month. In fact, after the bills are paid, on average, Canadians are left with $724 – an increase of $84 compared to 3 months ago, suggesting more Canadians are improving their financial situation.

Regionally, British Columbians (47%) are most likely to rate their personal debt situation as excellent, followed by Atlantic Canada (46%), Quebec (44%), Ontario (41%), Alberta (36%), and Saskatchewan and Manitoba (30%). There is also a generational divide, as Boomers (49%) are more likely to rate their debt situation as excellent compared to 37% of Millennials and Gen X’ers. However, at the end of the month, Millennials are left with the most after paying their bills ($869 vs. $636 Gen X’ers and $698 Boomers).

Improving Debt Situation Comes with a Price

Although more Canadians are taking control of their debt, measures had to be taken to improve their financial situation, and in some cases, this meant giving up the little things. In fact, of the 61% of Canadians who said they have improved their debt situation, half (52%) say they had to reduce their variable expenses, such as giving up a night at the movies or that daily coffee purchase. For others, updating and sticking to their budget (43%) was a factor in their success, while more than one in four (28%) found ways to reduce their fixed expenses such as rent, mortgage payments, car payments, etc. Some decided to take on side gigs, either selling items (23%), or taking on another job (11%). Other approaches included: inheriting money (12%); borrowing money from family or friend (9%); seeking debt help (8%); having debt forgiven (6%); participating in the sharing economy by driving or renting your home, etc. (5%); speaking with a Licensed Insolvency Trustee (4%); and 15% mentioned other approaches to improve their debt situation.

Standstill in Recent BoC Increase Rate Hikes Settles Canadians’ Nerves

As the Bank of Canada has held interest rates steady recently, Canadian’s concerns over rates have seen some relief since March. Fewer (38%; -5pts) Canadians say they are already beginning to feel the effects of an interest rate increase, and less than half (47%; +1pt) of Canadians express concern toward the impacts of rising interest rates could have on their financial situation. Moreover, there has been a decline in the proportion of Canadians who believe an interest rate hike will move them towards bankruptcy (28%; -5pts), or financial trouble (42%; -2pts).

Overall, when it comes to interest rate increases, fewer (49%; -2pts) Canadians are concerned with their ability to repay their debts than they used to be. Canadians are also feeling more confident in their ability to absorb an interest rate hike whether that be a 1 percentage point increase (30%; +3pts).

While concern over interest rates have softened, a majority (77%) continue to brace themselves for the possibility of an increase and agree that they will be more careful with how they spend their money. If the BoC does happen to increase rates, an increasing number of Canadians (78%; +4pts) claim they have a solid understanding of how the increase will impact their financial situation.

However, Many Canadians Are Still in Need of Help

Though things may be looking up for some, many Canadians remain haunted by concern and regret toward their current and future debt situation. Half (50%) are not confident that they will not have any debt in retirement, while 44% are not confident they will be able to cover all living and family expenses in the next 12 months without going into further debt.

About the Study

These are some of the findings of an Ipsos poll conducted between June 15 and June 19, 2018 on behalf of MNP LTD. For this survey, a sample of 2,001 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 Canadians 18+ 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 on this news release, please contact:
Sean Simpson
Vice President, Canada
Ipsos Public Affairs
+1 416 324-2002
[email protected]

About Ipsos Public Affairs

Ipsos Public Affairs is a non-partisan, objective, survey-based research practice made up of seasoned professionals. We conduct strategic research initiatives for a diverse number of Canadian American and international organizations, based not only on public opinion research, but elite stakeholder, corporate, and media opinion research.
Ipsos has media partnerships with the most prestigious news organizations around the world. In Canada, Ipsos Public Affairs is the polling partner for Global News. Internationally, Ipsos Public Affairs is the media polling supplier to Reuters News, the world's leading source of intelligent information for businesses and professionals. Ipsos Public Affairs is a member of the Ipsos Group, a leading global survey-based market research company. We provide boutique-style customer service and work closely with our clients, while also undertaking global research.

About Ipsos

Ipsos is an independent market research company controlled and managed by research professionals. Founded in France in 1975, Ipsos has grown into a worldwide research group with a strong presence in all key markets. Ipsos ranks fourth in the global research industry.
With offices in 88 countries, Ipsos delivers insightful expertise across five research specializations: brand, advertising and media; customer loyalty; marketing; public affairs research; and survey management.
Ipsos researchers assess market potential and interpret market trends. They develop and build brands. They help clients build long-term relationships with their customers. They test advertising and study audience responses to various media and they measure public opinion around the globe.
Ipsos has been listed on the Paris Stock Exchange since 1999 and generated global revenues of €1,782.7 million in 2016.