(Calgary) More than half of Canadians say they are $200 or less away from not being able to pay all their bills by the end of the month, according to a report by insolvency firm MNP, as rates of higher interest and the rising cost of living have resulted in a tightening of their budgets.
The proportion of Canadians who say they are in this situation, 52%, represents a rise of six percentage points compared to the results of the same survey for the first quarter, published in April.
The growing burden of household bills and food prices has heightened financial anxiety for Canadians and is exacerbated by rising debt-servicing costs, especially for those with deep debt, the president of MNP, Grant Bazian, in a press release.
MNP’s Consumer Debt Index fell to 83 points in its last reading, from 89 points in April, as Canadians expressed a more negative attitude towards their personal finances and debt.
The report notes that 35% of respondents say they already do not earn enough to cover their bills and debts, up from 30% in April and a record high for the survey. He also pointed out that 48% of respondents — a record high — were worried about their current level of debt.
Household debt has been identified as a key risk to the economy by the Bank of Canada, which is due to make its next interest rate decision on Wednesday.
As many as 69% of those polled by MNP said they are feeling the effects of interest rates, and 66% said they are worried about their ability to repay debt as rates rise, with around three in five respondents expecting to be in financial trouble if rates rise much more.
“Even though households are restricting discretionary spending and managing their finances more carefully, many have unfortunately reached the point where there is nowhere to cut. They’re already banking on the cheapest options at the grocery store and they’ve cut back on entertainment spending, but they’re struggling to meet financial obligations, like their mortgage or rent, and putting food on the table. table,” Mr. Bazian said.
“This situation forces them to make difficult decisions and to decide which bills to pay first and which ones they will have to postpone payment or which they will have to give up. »
A separate report released Monday by TransUnion found that 15% of Canadians had reduced their retirement savings, while more than a third said they were preparing for a possible recession by hoarding savings. More than a third said they believe Canada is already in a recession.
The credit reporting agency’s survey found that more than half of Canadians were cutting back on discretionary spending, with many canceling digital services, subscriptions or memberships.
“Concerns about inflation, rising interest rates, housing affordability and the perceived threat of a potential recession are affecting how Canadians manage their household finances,” noted the director of the TransUnion Canada Financial Services Research and Consulting, Matt Fabian, in a news release.
