Canadians are feeling negative about their personal finances this quarter, even following the recent interest rate cut by the Bank of Canada (BOC), according to the latest MNP Consumer Debt Index conducted by Ipsos. Ipsos said 56% of Canadians expressed concern interest rates have not gone down fast enough to provide the financial relief they require, and 57% will need interest rates to go down way more before their financial situation improves. It added two-thirds desperately need interest rates to go down. “Canadians may have hoped for a more significant cut to interest rates or a quicker impact from the reduction, leaving many feeling disheartened,” said MNP LTD President Grant Bazian in a press release.“With the prices of many daily necessities still high, many have not seen the meaningful reduction in their monthly expenses needed to ease their financial burdens.”After two years of aggressive interest rate hikes, Ipsos said 65% of Canadians believe high interest rates had a negative impact on their household finances. It said another 47% agree even if interest rates decline, they are concerned with their ability to repay their debts. One-third said they are so deep in debt lower interest rates would offer little help.“Some individuals, living paycheck to paycheck, are struggling to make ends meet and cover basic necessities,” said Bazian. “Others are so deeply indebted that their financial problems won’t be manageable regardless of interest rates.”Like the last quarter, Ipsos said 46% of Canadians are $200 or less away from failing to meet all their financial obligations. It said 29% cannot cover their bills and debt payments.Current debt perceptions have declined significantly this quarter after improvements in March, underscoring the heavy burden debt placed on people. When asked to reflect on their current debt situation compared to one year ago, fewer perceived it to be better (23%) and more (19%) rated it as much worse compared to one year ago. Bazian noted people struggling with debt often feel overwhelmed by guilt and embarrassment because of the stigma surrounding it. He said it is “important to recognize that debt is not solely a personal failing; numerous external factors can lead to unmanageable debt.”Canadians with $40,000 or less income were more likely to say they have accumulated so much debt lower interest rates will not help much. Three-fifths said if interest rates rise, they will be in financial trouble, increasing three points since the last quarter.Regardless of interest rates, Bazian said the data indicates many Canadians will need support to manage their debt payments in the coming months. He called Licensed Insolvency Trustees “an accessible resource for Canadians, who offer personalized, non-judgemental guidance to help navigate financial uncertainties with informed, customized strategies.”“They are the only federally-regulated debt professionals who can provide comprehensive advice on all of the debt-relief options available to Canadians, including informal debt settlement, consumer proposals, and bankruptcy,” he said. The BOC lowered it overnight rate by .25% on June 5, taking it to 4.75% — the first decrease in it since 2020. READ MORE: Bank of Canada lowers its rate by .25%, first decrease in four years“In Canada, economic growth resumed in the first quarter of 2024 after stalling in the second half of last year,” said the BOC. “At 1.7%, first-quarter GDP growth was slower than forecast in the MPR (Monetary Policy Report).” The poll was conducted online with 2,000 Canadian adults from June 6 to 11. It had a margin of error of +/- 2.5 percentage points, 19 times out of 20.
