Twenty-eight per cent of respondents to a new survey, which was conducted on behalf of MNP from June 15 to June 19, said another rate increase will hurdle them toward bankruptcy, while 42 per cent say if rates rise much more they’d fear for their financial well-being. While both readings were down modestly from the previous quarterly survey, that’s not lessening the alarm.
“When you look at the staggering number of people who are teetering on the edge, it’s clear that we are going to start seeing a rise in delinquencies as rates rise,” said MNP President Grant Bazian in a release.
The Bank of Canada has raised interest rates three times since last summer, and investors overwhelmingly expect the bank will boost its target for the overnight rate to 1.5 per cent on Wednesday.
Canadians have been warned for years that the cost of borrowing is bound to rise in this country; indeed, the MNP survey suggests some are paying heed, with 61 per cent of respondents saying they believe their debt situation has improved.
But there’s still a significant proportion of consumers who are struggling under the weight of their balance sheet.
Twenty-seven per cent of respondents to the survey said they have no wiggle room after covering their monthly obligations; meanwhile, 44 per cent say they’re within $200 of insolvency every month.
“Make no mistake about it, the level of household indebtedness in Canada is still very concerning,” Bazian said. “For those who are in debt and already struggling to make ends meet, slowly pumping the brakes on spending isn’t going to be enough at this point.”
Source: MNP, BNN Bloomberg