Latest debt index shows neutral outlook for household finances
After two consecutive interest rate pauses, Canadians' financial outlook remains stuck in neutral, as concerns about the economy and household budgets restrain sentiment.
The latest reading of the MNP Consumer Debt Index, released today (July 14) which tracks financial shows a hold steady at 88, but that stability masks a deep undercurrent of financial strain with almost two-thirds of Canadians saying they urgently need interest rates to fall, a figure virtually unchanged since last quarter.
Despite the pause, economic uncertainty continues to cast a long shadow and more than a third of Canadians feel stressed or anxious about their finances, while one in four feel like their lives are on hold, delaying milestones or scrambling to cover unexpected expenses.
“Canadians have not witnessed such economic uncertainty since the pandemic,” says Grant Bazian, President of MNP. “Many feel stuck, hesitating to make big life or financial decisions as they wait for things to stabilize.”
Younger adults and lower-income households are bearing the brunt with one third of Canadians aged 18-34 saying they’ve put their lives on pause, while close to half in that group feel stressed about their financial situation.
Overall, almost one in three respondents say they’re living paycheque to paycheque, rising to 45% among those earning under $40K. However, young Canadians are the least likely to say they’re being more cautious with their money, even though they’re most likely to feel the pressure.
To cope, many people are scaling back spending (41%), saving more (33%), or prioritizing debt repayment (27%), but the challenges also mean that a significant number, especially younger Canadians, are postponing major life goals like homeownership or starting a family.
Even with rates on pause, 41% of Canadians fear future hikes could push them toward bankruptcy and nearly half remain worried about their ability to manage debt, regardless of whether rates drop.
On a positive note, the average household now has $916 left at the end of the month, up $49 from last quarter, and the second highest since 2017, hinting that some Canadians are starting to build a buffer.
Yet the reality remains stark: 14 million Canadians say they’re close to insolvency. As Bazian puts it, “If financial stress is keeping you up at night, that’s your signal to get help.”
