At no point in this life-changing pandemic have Canadians been as concerned about their finances as they are now, a poll found.
The MNP consumer debt index, released today, plunged to its lowest level since its launch in 2017, losing 5 points since September, the biggest quarterly drop on record.
The survey is conducted quarterly by Ipsos for MNP Insolvency Trustees to track the attitudes of Canadians about their debt situation and their ability to make their monthly payments.
The lower the reading, the more pessimistic Canadians are, and this poll, conducted in December, found negative perceptions about personal finances and household debt are on the rise, along with concerns about setbacks.
“Almost a year after the onset of the coronavirus crisis, the financial confidence of Canadians has hit a low point. The virus has naturally created a lot more financial anxiety for those directly affected by job losses, falling wages and business closures. The index shows that financial pressure is increasing for much of the country, ”said MNP chairman Grant Bazian.
Four in ten Canadians (43%) say they are unconvinced that they can cover their living expenses for the next year without taking on more debt, a four point increase from September.
“When we see so many Canadians thinking they can’t afford living expenses without taking on more debt, it indicates that more financial upheaval is on the horizon – especially with so many uncertainties ahead,” Bazian said.
More (42%) are concerned about their current level of debt and 45% regret the amount of debt they have incurred. Only one in four respondents is confident in their ability to cope with a job loss or a change in salary.
Yet the survey also found that about three in ten Canadians (28%) have taken on more debt as a direct result of the pandemic.
And perhaps most worryingly, 61% of respondents believed that with low interest rates now is a good time to buy things they might not have otherwise been able to afford.
In Ontario, those numbers are even higher (63%), a sign that Ontarians may be bracing for a “painful debt recount,” MNP said.
Three in 10 Ontarians (29%) say they took on more debt as a direct result of the pandemic, the highest percentage, 17%, saying it was on credit cards.
“Those who are already strapped for cash, struggling with debt and struggling to navigate are at risk of being lulled into a debt trap,” Caryl Newbery-Mitchell, MNP insolvency trustee, told Toronto. “The results can be disastrous when people in financial difficulty try to get by by taking on more debt. It’s like trying to fill one hole by digging another.
Respondents were also concerned about this. Almost half (47%) said they were concerned that if interest rates went up they could have financial problems. About a quarter said their debt kept them awake at night, up 3 points from June.