“Canadians have not witnessed such economic uncertainty since the pandemic,” said Grant Bazian, president of insolvency firm MNP. (Photo by Artur Widak/NurPhoto via Getty Images) · NurPhoto via Getty Images
Following two consecutive interest rate pauses by the Bank of Canada (BoC), Canadians continue to feel financial pressure, with many stuck delaying major life goals amid ongoing economic uncertainty, according to the latest MNP Consumer Debt Index released Monday.
Nearly two-thirds of Canadians (64 per cent) say they desperately need interest rates to fall, given the financial constraints they’re under. Over one-third (36 percent) report feeling anxious or stressed about their financial situation, while one-quarter say they’ve had to stall life plans (26 per cent) or are constantly putting out financial fires due to an endless stream of unexpected costs (24 per cent).
Younger adults and lower-income households are the most likely to report financial strain and feeling stalled, the survey found.
“Canadians have not witnessed such economic uncertainty since the pandemic. We see some stability in financial perception, but many households feel like their lives are on hold, stuck in a financial holding pattern as they wait for the proverbial dust to settle,” said Grant Bazian, president of insolvency firm MNP, in a statement.
“Given the persistent economic pressures and backdrop of global volatility, many are hesitant to make major financial or life decisions, unsure of what lies ahead.”
In response to mounting financial pressures, 41 per cent of Canadians have reduced discretionary spending, 33 per cent are increasing savings or building emergency funds, and 27 per cent are prioritizing debt repayment. Nearly one-quarter (23 per cent) are putting life goals on hold, such as buying a home, starting a family or changing careers. Canadians aged 18 to 34 are most likely to postpone these milestones.
Over one-third of Canadians (41 per cent) fear that rising interest rates could drive them towards bankruptcy. And, even if rates were to decline, 45 per cent of Canadians remain concerned about their ability to repay debt.
According to Bazian, approximately 14 million Canadians say they are close to insolvency.
“There are some persistent fears around interest rates,” he said. “For some households, the damage has already been done. After years of rising costs, high interest rates and depleted savings, there may be some deep anxieties about what could still be to come.”
Even economists are divided on what the Bank of Canada will do next, Yahoo Finance Canada previously reported. In June, economists at Royal Bank and Scotiabank forecast there will be no further rate cuts in 2025, while economists at BMO and Desjardins Group, alternatively, expect a further 75 basis points of cuts by the end of 2025 or early 2026, which would bring the BoC’s overnight rate to two per cent.
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Amid ongoing uncertainty, more Canadians appear to be building financial buffers to safeguard against future economic disruptions.
The average amount households have left at month-end has risen to $916, up from just $49 last quarter — the second-highest level since MNP began tracking this data in 2017.
The largest increases were among Canadians aged 55 and older (up $84) and middle- to higher-income households. Those earning between $60,000 and $100,000 saw the biggest gains (up $260), followed by households earning over $100,000 (up $129).
“These are small but encouraging signs that some households may be regaining a bit of financial footing,” Bazian said. “While challenges remain, any movement towards greater stability is meaningful in this environment.”