The Bank of Canada’s recent interest rate cuts have done little to ease Canadians’ financial anxieties, according to MNP LTD’s latest Consumer Debt Index.
Released Monday, the index revealed 50% of Canadians feel they are $200 or less away from being unable to meet their monthly bills and debt obligations — an eight-point increase from the previous quarter.
The overall debt sentiment dropped to a record low of just eight points, well below its historical average in the mid-20s.
“This is the lowest we’ve seen since the index launched in 2017,” said MNP President Grant Bazian.
The survey, conducted by Ipsos between Dec. 6 and 17, captured responses following the Bank of Canada’s December rate cut, which lowered its benchmark rate to 3.25%.
Despite this, many Canadians remain financially strained, particularly those renewing mortgages at higher rates than during the pandemic’s low-interest period.
“The lag definitely weighs into the survey as well,” Bazian explained. “Rate cuts haven’t hit their pocketbooks yet.”
Holiday expenses and mounting economic pressures also played a role in dampening Canadians’ outlook.
Over half of respondents (51%) expect to take on more debt in 2025 to cover living expenses, and 41% expressed fear of job loss, the highest level recorded by the index.
Bazian remains cautiously optimistic that Canadians will feel relief if the Bank of Canada continues with additional rate cuts.
“It takes time, but eventually these changes should improve the financial picture for many households,” he said.
