Half of Canadians $200 or less away from not being able to pay bills: poll – National

The Bank of Canada’s rapid interest rate cuts don’t seem to have helped Canadians feel much better about their financial picture, as MNP LTD reports a new low in its view of personal debt.

The MNP Consumer Debt Index, a broad measure of how Canadians feel about their ability to pay off debt, reported Monday that 50 per cent of respondents now feel they are $200 or less away from being unable to pay all their bills and debts in a month.

This reading for the last quarter of 2024 is eight percentage points higher than the previous period, according to the insolvency firm.

Canadians’ personal debt outlook — a rating MNP calculates by asking where Canadians feel their financial health lands on a scale from excellent to poor — fell 12 percentage points to just eight points in the latest quarter. That number usually floats in the mid-20s and has never been lower in the history of the MNP Debt Index, which was launched in 2017.

MNP’s latest results rely on Ipsos polling of more than 2,000 Canadian adults from December 6 to 17. That means the poll captured some sentiment after the Bank of Canada’s latest 50 basis point interest rate cut on December 11th. it brought the central bank’s policy rate down to 3.25 per cent.

The Bank of Canada’s benchmark interest rate broadly sets the cost of borrowing across the country, which directly affects variable debt rates and affects what many Canadians pay on their mortgages.

At the beginning of last year, the central bank’s key interest rate was 5.0 per cent. and has fallen rapidly since June by a total of 1.75 percentage points.

But Grant Bazian, president of MNP LTD, told Global News on Monday that rate cuts to date have not changed the financial picture for many households.

Interest rate cuts, like increases, tend to have a delayed impact on Canada’s economy. It could take a year or more for top-level changes in borrowing costs to trickle down to Canadians’ finances, economists say.

Bazian said he is noticing the same trend at MNP, where bankruptcy filings do not drop immediately in response to the central bank’s interest rate cuts.

“The delay certainly weighs into the investigation as well, where they hear they’ve gone down, but it hasn’t really hit their wallets yet,” he said.

Despite the rate cuts in 2024, a number of Canadians last year were still adjusting to the Bank of Canada’s rapid rate hikes starting in 2022. Many households renewed mortgages last year and increased their monthly payments compared to the early pandemic when they first bought or renewed in an environment with a floor price.

While the MNP Debt Index doesn’t identify specific debt pain points for Canadians, Bazian said he believes mortgage renewals are likely to be reflected in the latest survey.

Trending now

• Mysterious balls of debris lead to the closure of 9 beaches in Sydney, Australia

• As Trump threatens Canada, ‘something dangerous is brewing’: analyst

The MNP survey shows that a growing number of consumers are stressed about their ability to absorb an unexpected cost like a sudden car repair, while a recent TransUnion credit report suggested that one in five Canadians plan to take on more debt this year to keep up with costs, mostly via credit card.

And more than half of those surveyed (51 percent) said they thought they would likely need to take on more debt to cover all their living expenses in the next year.

Bazian said it’s typical to see declines in consumer debt sentiment in the final quarter of the year, as gift-giving and holiday dinners inflate the monthly budget and many Canadians vow to get their finances under control in the new year.

He added that stress over holiday bills coming due coincides with financial anxiety for many Canadians.

Fear of someone in the household losing their job also rose by nine percentage points in the latest poll, now representing 41 percent of respondents, a record high for the MNP Debt Index.

Bazian said it’s not just outright stress about debt and bills coming due that is vexing Canadians. Concerns over President-elect Donald Trump’s tariff threats against Canada, a looming federal election and other uncertainties could cloud the overall outlook for households, dampening the overall sentiment captured in the poll, he suggested.

“People answer the survey at a certain time, and during that time there’s a lot of uncertainty in the world, whether it’s financially related or not,” Bazian said.

Fewer Canadians now expect their personal debt situation to improve in a year (27 per cent, down four percentage points), and more respondents said they think things will get worse.

Bazian, on the other hand, said he expects the debt outlook to improve broadly if the Bank of Canada continues to deliver further rate cuts as expected this year and as Canadians feel the relief of earlier moves to lower borrowing costs.

© 2025 Global News, a division of Corus Entertainment Inc.