Most Canadians are worried about what lies ahead for their finances in the coming months, but many ended the year with an improved outlook on debt, bucking a seasonal trend of declining sentiment.
The quarterly MNP Consumer Debt Index – which measures Canadians’ attitudes toward their debt and ability to pay their bills – edged up for the first time in December since its inception by Canada’s largest consumer insolvency firm in 2017.
According to the results of their quarterly survey conducted by Ipsos between Nov. 28 and Dec. 1, published Monday, the index grew by one point since last quarter to 87. That’s in sharp contrast to about the same period in 2024, when it fell 10 points to 79.
But the headline figures mask a generational divide in attitude while suggesting that some Canadians have adapted to financial shocks, reducing the impact of persistent financial pressures.
“It’s ironic in a way,” said Grant Bazian, president of MNP’s insolvency practice and a licensed insolvency trustee. “It almost seems like Canadians are forcing themselves to feel better about things despite the doom and gloom out there.”
Canadians’ debt-to-income ratio climbed to 176.7% last quarter
Mr. Bazian pointed to signs of increased spending on travel and experiences alongside the survey’s findings of modest spikes in monthly savings as signs of cautious optimism layered over persistent anxiety.
The average amount Canadians had left after monthly expenses, for example, rose by $163 in the last quarter of the year, and now sits at $907, the survey found.
More than 40 per cent still said they were within $200 of not being able to pay their bills each month, though the figure was the lowest level measured by the index “in the postpandemic period.”
Meanwhile, 71 per cent expected the cost of living to worsen in 2026. And despite easing conditions in some markets, housing affordability remained a top concern for most Canadians. More than two in five were afraid that a future increase in interest rates could push them toward bankruptcy.
Millions of Canadian mortgages are coming up for renewal this year. Many of them purchased at peak prices, and falling home values in places such as Ontario have left some with little or no equity.
Ron Butler, founder of Butler Mortgage, previously told The Globe and Mail that few lenders would renew a mortgage for someone who bought a million-dollar home with an $800,000 mortgage in 2020-2021 that’s now worth only slightly more than that.
Vulnerable Canadians fall further behind as tariffs, economic uncertainty take toll, report says
While the Bank of Canada held its last policy interest rate at 2.25 per cent, rates remain one of the biggest sources of stress for Canadians, the survey found, with about 64 per cent saying they urgently needed interest rates to come down.
TransUnion’s third-quarter Credit Industry Insights Report also showed that total consumer debt rose to $2.6-trillion, driven by rising mortgage balances, which reached $1.89-trillion. The average new mortgage loan amount increased 4.1 per cent year over year to $359,623.
“What’s changed is not the level of debt, but the psychology around it,” said Francisco Remolino, a licensed insolvency trustee. “Consumer debt is not easing in any meaningful way.”
In Ontario, Mr. Remolino sees consumers carry much higher unsecured debt like credit cards, lines of credit and payday loan balances. Holiday spending this past December was also often financed rather than discretionary, said Mr. Remolino.
The difference this year is that many households might be leaning on credit just to “maintain normalcy,” not to splurge, said Mr. Remolino. “Fewer people were shocked by their balances, but more are quietly stretched.”
Opinion: Debt is catching up with Canadians
But there are also generational divides. MNP tracked a “fight or flight” response toward debt in their findings across different age groups.
Nearly 60 per cent of Canadians assumed “fight” mode, saying they actively addressed debt by budgeting and consolidating loans, said Mr. Bazian. The minority that assumed a “flight” mode skewed younger.
About 23 per cent of those between the ages of 18 to 34 said they felt financially paralyzed and 22 per cent avoided discussing financial matters.
The latter group may feel more financially powerless, said Mr. Bazian, facing higher debt burdens from student loans and car loans while earning less early in their careers.
For all Canadians, rising housing costs, rent, groceries and insurance mean that “there’s very little margin for error,” said Mr. Remolino.
“We’re seeing more clients who are technically keeping up – but only barely – and who are one unexpected expense away from insolvency.”
The Ipsos study on behalf of MNP Ltd. surveyed a sample of 2,001 Canadians aged 18 years and over. The poll was conducted online and can’t be assigned a margin of error.
MNP Ltd. is a subsidiary of national professional services firm MNP LLP.