One in Five (21%) Canadians Technically `Insolvent'

Toronto, ON - A new survey conducted by Ipsos Reid on behalf of MNP Ltd. reveals that a sizeable portion of Canadians would technically be considered `insolvent' based on their stated debts and assets.

Insolvency is a financial state that can be defined in one of two ways: As the inability to pay debts as they come due or having liabilities in excess of assets. A state of insolvency might cause a debtor to eventually file bankruptcy.

Younger Canadians, ages 18-34 (34%) are most likely to be considered insolvent, ahead of middle-aged Canadians, ages 35-54 (20%) and seniors, ages 55+ (10%). Regionally, Quebecers (28%) are technically most insolvent, followed by Atlantic Canadians (24%), Albertans (23%), Prairies residents (23%), Ontarians (16%), and British Columbians (14%). Other notably `insolvent' groups include renters (30%) and parents (29%).

Nearly six in ten (57%) Canadians `agree' (17% strongly/40% somewhat) that they would know where to turn if they were to become insolvent, while a minority (43%) `disagree' (18% strongly/25% somewhat). A large problem for many is the perception of lack of resources related to insolvency. Four in ten (37%) even `disagree' (10% strongly/27% somewhat) that they believe there are enough resources available to Canadians about how to deal with (and prevent) insolvency, although a majority (63%) `agree' (10% strongly/52% somewhat) that there are enough resources.

Paying Down Debt Important, But If Rates are Cheap? Give Me More...

Ironically, while most (83%) Canadians `agree' (34% strongly/49% somewhat) that paying down debt is more important, financially, than saving, a sizeable portion indicate they are willing to take on more debt due to the Bank of Canada's key interest rate cut announcement. A few weeks ago, the Bank of Canada announced that it was going to cut its key interest rate by 0.25 percent to an all-time low of 0.75 per cent. This would mean that interest payments and liabilities like lines of credit and variable mortgage from participating banks would be reduced.

The results of the data reveal that:

• One in five (17%) homeowners are willing to take out a home equity line of credit to finance a large purchase or expense (such as a vacation, home upgrade, etc.)
• An equal proportion (17%) would be likely to take out a non-home equity line of credit to take advantage of the lower interest rate
• One in five (20%) homeowners would be likely to switch from a fixed mortgage plan to a variable rate plan

This finding is only exacerbated by the data revealing a large disconnect when it comes to what Canadians believe their debt-to-income ratio is compared to what it likely is. In December 2014, Statistics Canada released a report that average household debt in Canada has reached an all-time high of 162.6% of disposable income, meaning that Canadians owed $1.63 for every dollar of disposable income.

When asked to assess the average Canadians debt ratio, as well as their own, Canadians are drastically off the mark. Canadians believe the average Canadians debt-to-income rate is 48%, nearly 120 points below the actual figure.

These are some of the findings of an Ipsos Reid poll conducted between February 6th to 12th, 2015, on behalf of MNP Ltd. For this survey, a sample of 1,006 adults was interviewed via the Ipsos I-Say online panel. 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 +/ - 3.5 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 on this news release, please contact:

Sean Simpson
Vice President
Ipsos Reid
Public Affairs
(416) 572-4474
[email protected]

About Ipsos Reid

Ipsos Reid is Canada's market intelligence leader, the country's leading provider of public opinion research, and research partner for loyalty and forecasting and modelling insights. With operations in eight cities, Ipsos Reid employs more than 600 research professionals and support staff in Canada. The company has the biggest network of telephone call centres in the country, as well as the largest pre-recruited household and online panels. Ipsos Reid's marketing research and public affairs practices offer the premier suite of research vehicles in Canada, all of which provide clients with actionable and relevant information. Staffed with seasoned research consultants with extensive industry-specific backgrounds, Ipsos Reid offers syndicated information or custom solutions across key sectors of the Canadian economy, including consumer packaged goods, financial services, automotive, retail, and technology & telecommunications. Ipsos Reid is an Ipsos company, a leading global survey-based market research group.

To learn more, please visit www.ipsos.ca.

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 third in the global research industry.

With offices in 86 countries, Ipsos delivers insightful expertise across six research specializations: advertising, customer loyalty, marketing, media, 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 e1,712,4 million (2 274 M$) in 2013.

Visit www.ipsos.com to learn more about Ipsos' offerings and capabilities.